NEW YORK — Terraform Labs co-founder Do Kwon will have to wait longer than anticipated to discover his prison sentence for orchestrating a massive crypto fraud that erased approximately $50 billion from the crypto market in May 2022.
During the extensive hearing, District Judge Paul Engelmeyer of the Southern District of New York (SDNY) spent the initial hour scolding prosecutors for presenting a large volume of victim impact statements — 315 letters — to both the court and the defense just one day before the hearing began. Several victims addressed the court during Kwon’s sentencing hearing on Thursday morning, with some appearing in person and others joining via phone, before the judge adjourned for lunch.
The judge provided Kwon and his legal team with the option to postpone sentencing by as much as six weeks due to the newly presented victim impact statements. Engelmeyer, typically calm and composed in the courtroom, showed visible frustration at the prosecution’s last-minute submission of victim statements, emphasizing that it was unacceptable to introduce such significant materials without adequate notice.
Kwon and his attorneys opted to proceed with the sentencing as planned, conveying to the court that individuals had traveled from around the globe to be present and renouncing their right to appeal based on the belated delivery of the victim statements.
After agreeing to continue with the hearing, Engelmeyer took a moment to reprimand the government for delaying the compilation of their victim statements:
“I have to say the obvious — you must improve,” Engelmeyer stated. “In future cases, victims need to be notified much earlier … it is simply unacceptable to drop 315 letters on the court … it’s disrespectful to the defense and, most importantly, it fails to fully respect the victims.”
Passages from those victims’ statements played a crucial role in the prosecution’s presentation to the court, as they highlighted the financial and emotional struggles stemming from the collapse of the Terra/LUNA ecosystem in 2022.
Victims also had the chance to voice their experiences during the hearing. One victim, Chauncey St. John, testified in person, describing how the company’s failure decimated his charitable organization, Angel Protocol, alongside the non-profits it supported. He also relayed how his in-laws, including his wife’s parents and brother, had invested their life savings into Terra/LUNA and are now facing delays in retirement and accumulating debts.
“I bear the guilt of their losses every day,” St. John shared. “I forgive [Do Kwon] personally, and I pray for God to have mercy on his soul.”
Other victims expressed harsher sentiments.
One man, connecting to the court by phone, recounted the loss of a friend — implied to be a suicide — due to severe financial losses from Terra’s downfall. Another described facing such substantial losses that he was forced to return to live with his parents, lost his wife to divorce, and is now witnessing his sons work as car mechanics instead of pursuing their college dreams in engineering, all because of the financial devastation inflicted by Kwon’s fraud.
“I never imagined that someone I never met, never spoke to, could completely ruin my life,” stated Stanislav Trofinchuk, a Ukrainian national.
A 58-year-old Russian woman recounted in court (through a translator) how she became homeless and is “wandering the streets” of Tbilisi, Georgia after losing all her assets in the collapse.
“The $81,000 [invested in Terra/LUNA] shrank to $13 that I can hold in my hand,” she explained. “Do you understand the moral harm that has been inflicted upon me and the state I find myself in?”
Throughout the testimonies, Kwon, appearing gaunt, remained stoic and seemingly unaffected.
