Do Kwon’s Sentencing Hearing Drags on as Court Weighs Mountain of Victim Testimony

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 roughly $50 billion from the crypto ecosystem in May 2022.

The lengthy hearing saw District Judge Paul Engelmeyer of the Southern District of New York (SDNY) spend the first hour or so 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 kicked off. Half a dozen victims spoke at his sentencing hearing on Thursday morning, including both individuals speaking in person and those phoning in, before the judge broke the court for a lunch break.

The judge offered Kwon and his legal team the opportunity to delay sentencing by up to six weeks in light of the new victim impact statements. Engelmeyer, whose presence in the courtroom is usually calm and measured, was visibly exasperated by the prosecution’s late-night dump of victim statements, reiterating to both parties that it was a “big deal” for such impactful materials to be introduced at the eleventh hour.

Kwon and his lawyers declined the opportunity to reschedule the sentencing, telling the court that people had traveled from around the world to be present and waiving their right to appeal the court’s sentence based on the late disclosure of the victim statements.

Once Engelmeyer agreed to continue with the proceedings, he took time to chastise the government for procrastinating on getting their victim statements together:

“I am obliged to say the obvious — you need to do better,” Engelmeyer said. “In future cases, you need to give notice to victims much earlier … it is simply not acceptable to dump 315 letters on the court … it’s simply disrespectful to the defense and, most of all, it’s not fully respectful to the victims.”

Excerpts from those victims' statements featured heavily in the prosecution’s address to the 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, detailing how the company’s implosion devastated his charitable organization, 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 into Terra/LUNA and now face postponed retirements and debts.

“I have to live with the guilt of their losses every day,” St. John said. “I forgive [Do Kwon] personally, and I pray for God to have mercy on his soul.”

Other victims were less forgiving.

One man, calling into court telephonically, told the judge how he’d lost a friend — implied to be a suicide — following massive financial losses from Terra’s collapse. Another detailed losses so significant that he’d been forced to move back in with his parents, lost his wife to divorce, and was watching his sons work as car mechanics rather than go to college to study engineering as they’d originally hoped before the family’s finances were devastated by Kwon’s fraud.

“I never imagined that someone I never met, never spoke to, could destroy my life so completely,” the man, Ukrainian national Stanislav Trofinchuk, said.

A 58-year-old Russian woman told the court (via a translator in the courtroom) how she was now homeless and “wandering the streets” of Tbilsi, 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,” the woman said. “Do you understand the moral damage that has been done to me and the condition that I find myself in?”

Throughout the testimony, Kwon, who appeared gaunt, sat stony-faced and seemingly unmoved.

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