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 scam that wiped about $50 billion from the crypto ecosystem in May 2022.
In the lengthy hearing, District Judge Paul Engelmeyer of the Southern District of New York (SDNY) spent the first hour berating 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. Half a dozen victims spoke at his sentencing Thursday morning, including both people who spoke in person and those who called in, before the judge adjourned for lunch.
The judge offered Kwon and his legal team the option to delay sentencing for up to six weeks in light of the new victim impact statements. Engelmeyer, whose courtroom presence is usually calm and measured, was visibly irritated by the prosecution’s late-night dump of victim statements, repeating to both sides that it was a “big deal” for such impactful material to be introduced at the eleventh hour.
Kwon and his lawyers declined the possibility of rescheduling the sentencing, telling the court that people had traveled from all over the world to be present, and waived their right to appeal the court’s ruling based on the late release of the victim’s statements.
When Engelmeyer agreed to proceed with the case, he took time to chastise the government for its delay in getting their victim impact statements together:
“I’m bound to state the obvious — you’ve got to do better,” Engelmeyer said. “In future cases, you need to give notice to the victims much earlier … it is simply not acceptable to dump 315 letters on the court … it is simply disrespectful to the defense and most of all it is not fully respectful to the victims.”
Excerpts from these victims’ statements featured heavily in the prosecution’s submission to the court as they detailed the financial and personal hardships caused by the implosion of the Terra/LUNA ecosystem in 2022.
The victims also had the opportunity to speak for themselves during the hearing. A victim, Chauncey St. John, took a personal stand and described how the company’s implosion devastated his charity, Angel Protocol, and the non-profits 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 face delayed retirements and debt.
“I have to live with the guilt of their loss every day,” said St. John. “I forgive [Do Kwon] personally, and I pray to God to have mercy on his soul.”
Other victims were less forgiving.
A man who called the court by phone told the judge how he had lost a friend – suggested to be a suicide – following massive financial losses from Terra’s collapse. Another detailed loss, so significant that he had been forced to move in with his parents, lost his wife to divorce, and seen his sons work as auto mechanics instead of going to college to study engineering as they had originally hoped before the family finances were destroyed by Kwon’s fraud.
“I never imagined that someone I never met, never spoke to, could destroy my life so completely,” said the man, Ukrainian citizen Stanislav Trofinchuk.
A 58-year-old Russian woman told the court (via a courtroom translator) how she was now homeless and “wandering the streets” of Tbilisi, Georgia, after losing all her assets in the collapse.
“The $81,000 [invested in Terra/LUNA] turned into $13 that I could hold in the palm of my hand,” said the woman. “Do you understand the moral damage that has been done to me and the condition I’m in?”
Throughout the testimony, Kwon, who appeared gaunt, sat stony-faced and seemingly unfazed.
