Do Kwon pleads guilty to $ 40 billion fraud

Terraform Labs co-founder До Квон" href="https://noworries.news/biography/do-kvon/" data-bio-id="3665">Do Kwon has pleaded guilty to a large-scale cryptocurrency fraud that is estimated to have cost investors about $ 40 billion after the collapse of his projects in 2022. In a federal court in Manhattan, the 33-year-old entrepreneur admitted to misleading investors about the stability mechanisms of the TerraUSD stablecoin, which was supposed to maintain a fixed value of $ 1.

Prosecutors said that in May 2021, when TerraUSD temporarily lost its peg to the dollar, Kwon concealed the fact of a secret agreement with a high-frequency trading company that bought millions of tokens to support the rate. Instead, he publicly attributed the price recovery to an automated algorithm called Terra Protocol.

The deception contributed to a significant increase in investment in Terraform products and pushed the capitalization of the related cryptocurrency Luna to $ 50 billion in the spring of 2022. The collapse of the Terra ecosystem in May of that year wiped out tens of billions of dollars in investor funds. «What I did was wrong,» Kwon told Judge Paul Engelmeyer, admitting to making false statements about the mechanism for restoring the stablecoin’s exchange rate.

Prosecutors called the scam one of the largest in world history. Under the terms of the plea agreement, Kwon faces up to 25 years in prison, but the government agreed to seek no more than 12 years if he continues to cooperate with the investigation. The sentence is to be announced on December 11.

Kwon has been in custody since his extradition from Montenegro late last year. He previously agreed to pay $ 80 million in civil fines to securities regulators. He is also a defendant in a criminal case in South Korea, and U.S. prosecutors have not objected to his possible transfer there after serving half of his sentence in the United States.