Do Kwon, one of the co-founders of Singapore-based Terraform Labs that developed the “stablecoins” TerraUSD and Luna, has pleaded guilty to two charges regarding cryptocurrency fraud. Charged in a US court, the charges specifically relate to defrauding and wire fraud.
Kwon is accused of misleading his investors about TerraUSD. In 2021, he said that the stablecoin was designed to maintain a value of US$1 (~RM4.23). However, when the coin’s value went below its pegged value, he said that a computer algorithm known as “Terra Protocol” had restored the coin’s value.
In reality, Kwon had secretly been engaging a high-frequency trading firm to covertly buy millions of dollars of the token, in order to artificially inflate its price. In the process of propping up its value, he then proceeded to convince investors to buy Terraform products, as well as boost the value of Luna to US$50 billion (~RM210 billion).
In 2024, Kwon agreed to pay a US$80 million (~RM336.6 million) civil fine and be banned from any form of crypto dealings, as part of a US$4.55 billion (~RM19.15 billion) settlement between him and the US Securities and Exchange Commission (SEC). Kwon is just one of a handful of major cryptocurrency moguls to face legal consequences. Sam Bankman-Fried, who founded the US’s largest crypto exchange, FTX, was recently found guilty for fraud and sentenced to 25 years in prison.
For his transgression and admission of guilt, the Terraform is sentenced to 12 years in prison. Because he is also facing charges in his native country of South Korea, will be transferred over to the country once he has served half the sentence in the US.
