A former tech executive from South Korea, accused of contributing to a cryptocurrency crisis that led to over $40 billion in losses for investors, has admitted guilt to two fraud charges.
Do Kwon, the head of Singapore-based Terraform Labs, which was responsible for the cryptocurrencies TerraUSD and Luna, both of which collapsed in 2022 leading to a broader downturn in the crypto market, stands accused by the US of orchestrating a fraud involving billions of dollars in crypto assets.
Under the terms of his plea agreement, prosecutors have committed to not requesting a sentence exceeding 12 years. Kwon is slated for sentencing on December 11.
Kwon’s guilty plea, as commented by Todd Snyder, appointed by US authorities and Terraform Labs to oversee the company’s wind-down, highlights the importance of accountability within the digital asset sector. He stated that those responsible for the collapse of Terraform Labs would be held accountable by the company, and that assets would be recovered in the interest of the claimants.
Following a protracted legal battle, Kwon initially fled South Korea upon the issuance of an arrest warrant in 2023, only to be apprehended in Montenegro and subsequently extradited to the US.
US prosecutors contend that Kwon falsely represented features intended to maintain TerraUSD’s value at $1 without external interference. He allegedly arranged for a trading firm to covertly buy millions of dollars worth of the token in order to maintain TerraUSD’s value in 2021, while telling investors that an algorithm called Terra Protocol was responsible.
The alleged misrepresentation led a variety of investors to purchase Terraform’s offerings, which in turn supported the value of the company’s Luna token, which was closely related to TerraUSD.
However, the following year, Kwon’s TerraUSD and Luna cryptocurrency experienced a catastrophic collapse. In court, Kwon confessed to making false and misleading statements about how TerraUSD regained its peg, and expressed regret for his actions.
Kwon had initially pleaded not guilty to nine charges, including securities and wire fraud and money laundering conspiracy, which could have resulted in up to 135 years in prison. As part of his plea deal, Kwon agreed not to contest the allegations. He must also relinquish up to $19.3 million plus interest and various properties, and provide restitution. Although prosecutors have capped their requested sentence at 12 years, Judge Paul Engelmayer reserved the right to impose a longer sentence, potentially up to 25 years in prison.
Kwon is also facing charges in South Korea, according to his attorney.
Source: https://www.bbc.com/news/articles/c2kznpdvwwlo?at_medium=RSS&at_campaign=rss
