NEW YORK – Terraform Labs co-founder Do Kwon will wait a little longer than expected to find out how much time he will serve in prison for orchestrating a massive crypto fraud that wiped approximately $50 billion from the crypto ecosystem in May 2022.
At the lengthy hearing, District Judge Paul Engelmeyer of the Southern District of New York (SDNY) spent roughly the first hour chastising prosecutors for dumping a mountain of victim impact statements (315 letters) on both the court and the defense just 24 hours before the hearing began. A half-dozen victims spoke at his sentencing hearing Thursday morning, including people who spoke in person and those who called by phone, before the judge paused the courtroom for lunch.
The judge offered Kwon and his legal team the opportunity to delay sentencing for up to six weeks in light of the new victim impact statements. Engelmeyer, whose courtroom presence is typically calm and measured, was visibly exasperated by the prosecution’s late-night dumping of victim statements, and reiterated to both sides that it was a “big deal” that such shocking materials were presented at the last minute.
Kwon and his lawyers declined the opportunity to reschedule the sentencing, telling the court that people had traveled from all over the world to be present and waiving their right to appeal the court’s ruling based on the late release of the victims’ statements.
Once Engelmeyer agreed to continue with the process, he took the time to rebuke the government for delaying the preparation of victims’ statements:
“I am obliged to state the obvious: it needs to be done better,” Engelmeyer said. “In future cases, it is necessary to notify the victims much earlier… it is simply not acceptable to throw 315 letters at the court… it is simply disrespectful to the defense and, above all, not totally respectful to the victims.”
Excerpts from those victims’ statements featured heavily in the prosecution’s speech in court, as they detailed the financial and personal hardships caused by the implosion of the Terra/LUNA ecosystem in 2022.
Victims also had the opportunity to speak for themselves during the hearing. One victim, Chauncey St. John, took the stand in person and detailed how the company’s implosion devastated his charity, Angel Protocol, and the nonprofits it served. He also told the court how his in-laws, including his wife’s parents and brother, had invested their life savings in Terra/LUNA and now faced debt and postponed retirements.
“I have to live with the guilt of their losses every day,” St. John said. “I forgive [Do Kwon] personally, and I ask God to have mercy on his soul.”
Other victims were less forgiving.
One man, who telephoned the court, told the judge how he had lost a friend (who was assumed to have committed suicide) following the huge financial losses caused by the collapse of Terra. Another detailed losses so significant that he was forced to move back in with his parents, lost his wife to divorce, and watched his children work as auto mechanics instead of going to college to study engineering as they originally hoped before the family finances were devastated by Kwon’s fraud.
“I never imagined that someone I had never met and never spoken to could destroy my life so completely,” said the man, Ukrainian citizen Stanislav Trofinchuk.
A 58-year-old Russian woman told the court (through a translator in the courtroom) that she was now homeless and “wandering the streets” of Tbilsi, Georgia, after losing all her property in the collapse.
“The $81,000 [invested in Terra/LUNA] “They became 13 dollars that I could have in the palm of my hand,” the woman said. “Do you understand the moral damage that has been done to me and the condition I am in?”
Throughout the testimony, Kwon, who appeared emaciated, sat with his face impassive and seemingly impassive.
