According to reports, Terraform Labs founder Do Kwon was sentenced to 15 years in prison by a New York court for charges including fraud related to the collapse of the Terra-Luna ecosystem.
Do Kwon is a former South Korean businessman and software engineer, co-founder and CEO of Terraform Labs.
In January 2018, Do Kwon co-founded Terraform Labs Pte. Ltd. with entrepreneur Daniel Shin.
In the same year, Terraform Labs released a cryptocurrency called Luna.
Terraform began selling its stablecoin TerraUSD (UST) in 2020. The UST stablecoin uses an algorithm linked to the supply of Luna to maintain a value of around 1 dollar, unlike other currencies that are pegged to cash.
The value of Luna eventually peaked at over 116 dollars in April 2022.
However, the company's stablecoin TerraUSD and cryptocurrency Luna collapsed in May 2022, evaporating nearly 45 billion dollars in market value within a week and leading to larger losses in the cryptocurrency market amounting to hundreds of billions of dollars.
The U.S. Securities and Exchange Commission began an investigation into Terraform Labs in June 2022 to clarify whether the marketing of the TerraUSD stablecoin violated federal securities and investment product regulations.
The charges are related to multiple frauds associated with the Terra–Luna collapse, including conspiracy to commit fraud, commodity fraud, telecommunications fraud, securities fraud, market manipulation, and money laundering, among others. Without a plea agreement, Kwon could face up to 135 years in prison if all nine charges are upheld.
