Onetime cryptocurrency mogul Do Kwon has been sentenced to 15 years in prison after a US$40 billion (NZ$68.8 billion) crash revealed his crypto ecosystem to be a fraud. Victims said the 34-year-old financial technology whizz weaponised their trust to convince them that the investment – secretly propped up by cash infusions – was safe.
Kwon, a Stanford graduate known by some as “the cryptocurrency king”, apologised after listening as victims – one in court and others by telephone – described the scam’s toll: Wiping out nest eggs, depleting charities and wrecking lives. One told the judge in a letter that he contemplated suicide after his father lost his retirement money in the scheme.
Judge Paul A Engelmayer said at a day-long sentencing hearing in Manhattan federal court that the government’s recommendation of 12 years in prison was “unreasonably lenient” and that the defence’s request for five years was “utterly unthinkable and wildly unreasonable”. Kwon faced a maximum sentence of 25 years in prison.
“Your offence caused real people to lose US$40 billion (NZ$68.8 billion) in real money, not some paper loss,” Engelmayer told Kwon, who sat at the defence table in a yellow jail suit. The judge called it “a fraud on an epic, generational scale” and said Kwon had an “almost mystical hold” on investors and caused incalculable “human wreckage”.
[…] Terraform Labs touted its TerraUSD as a reliable “stablecoin” – a kind of currency typically pegged to stable assets to prevent drastic fluctuations in prices. But prosecutors say it was an illusion backed by outside cash infusions that came crumbling down after it plunged far below its US$1 (NZ$1.70) peg. The crash devastated investors in TerraUSD and its floating sister currency, Luna, triggering “a cascade of crises that swept through cryptocurrency markets”.
One of the biggest problems of crypto as a currency, you know, you can actually buy stuff with, is its high volatility. Kwon took advantage of this by supposedly creating a crypto coin that was “stable”.
“I have spent almost every waking moment of the last few years thinking of what I could have done different and what I can do now to make things right,” Kwon told Engelmayer. Hearing from victims, he said, was “harrowing and reminded me again of the great losses that I have caused”.
Sure, bro. Kwon, if I’m thinking of the right guy, and I probably am, used to brag on social media and call other people losers. In other words, he is a prick.
One victim, speaking by telephone, said his wife divorced him, his sons had to skip college, and he had to move back to Croatia to live with his parents after TerraUSD’s crash evaporated his family’s life savings. Another said he has to “live with the guilt” of persuading his in-laws and hundreds of nonprofit organisations to invest.”
Not to sound cold, but cry me a river. Investing money in crypto that you can afford to lose is one thing: investing all your life savings is sheer idiocy.
Chauncey St John, speaking in court, said some nonprofits he worked with lost more than US$2m (NZ$3.4m) and a church group lost about US$900,000 (NZ$1.5m). He and his wife were saddled with debt and his in-laws were forced to work well past their planned retirement, he said.
Personally I think charities who invested in crypto deserve to be investigated. It’s really no different from taking donations and spending them at the local casino.
[…] A prosecutor read excerpts from some of more than 300 letters submitted by victims, including a person identified only by initials who lost nearly US$11,400 (NZ$19,603) while juggling bills and trying to complete college. Kwon had made Terra seem like a safe place to stash savings, the person said.
[…] Kwon created an “illusion of resilience while covering up systemic failure”, Assistant US Attorney Sarah Mortazavi told Engelmayer. “This was fraud executed with arrogance, manipulation and total disregard for people.
Like I said, he is, for lack of a better word, a prick.
Overall though this has been great for the crypto market and investors. Trust is important in any business and crypto has had more than its fair share of fraudsters and scammers. My advice is to only invest what you can afford to lose, which should be pretty obvious.
In fact, putting money in crypto can be quite fun. But please, don’t treat it as serious investment.
Source: https://www.1news.co.nz/2025/12/12/crypto-mogul-jailed-for-15-years-over-69b-stablecoin-fraud/
