Details
The chapters of the fall of the 'Terra' project were completed with a 15-year prison sentence handed down to the project's founder 'Do Kwon', following the collapse of the 'TerraUSD' and 'Luna' currencies.
The federal court in Manhattan considered what 'Kwon' did to be unprecedented fraud after he admitted to misleading investors about the mechanisms of the stablecoin, which were promoted as a safe haven during market volatility.
Judge 'Paul Engelmayer' confirmed that the extent of the damage caused by 'Kwon' is the largest in the history of federal fraud cases, as the collapse of the two currencies in 2022 erased nearly 40 billion dollars, destabilized the cryptocurrency sector, and caused the bankruptcy of several companies.
During the session, 'Kwon' apologized to the victims, hundreds of whom submitted written statements about their financial and psychological losses, including an investor who lost nearly half a million dollars of his savings.
The prosecution clarified that 'Kwon' intentionally manipulated the value of digital tokens and secretly resorted to a high-frequency trading company to intervene when 'TerraUSD' lost its peg to the dollar, while publicly attributing the recovery to the project's automated stabilization system.
Despite facing nine criminal charges including securities fraud, wire fraud, and money laundering, he ended up pleading guilty to two counts of conspiracy to commit fraud and internet fraud.
The prosecution demanded a sentence of no less than 12 years, while the defense sought to limit it to five years.
In addition to the criminal sentence, 'Kwon' previously agreed to pay a civil fine of 80 million dollars and to be banned from any cryptocurrency-related activities, as part of a major settlement with the U.S. Securities and Exchange Commission.
The plea agreement also allows for his transfer outside the United States after serving half of his sentence, which may open the door for him to be prosecuted in South Korea.
The case of 'Kwon' brought back to the forefront his behavior before the collapse, when he was known for his provocative style and mockery of his critics, before later admitting that he had exaggerated that and built a public image for 'entertainment' purposes.
Despite admitting responsibility for the design failures of the Terra project, he still believes that some of the charges in his country are politically motivated.
For his part, the anonymous investigator known as 'Fatman Terra', who helped uncover the case, believed that what happened confirms that accountability may be delayed but is not impossible, noting that the world of cryptocurrencies is rife with fraudulent practices from which many perpetrators escape, but systematic and legal efforts can ultimately lead to justice.
