Incidents That Never Fade—Past History That Do Kwon’s Case Brings In
- US prosecutors press for twelve years as they advance a severe case tied to Terra’s fall.
- During March 2024, Sam Bankman-Fried was sentenced to 25 years in prison for stealing billions in customer funds.
- Earlier frauds like OneCoin, Thodex, and Centra Tech serve as reminders of crypto’s darker history.
US prosecutors asked a federal judge to issue a minimum 12-year prison sentence for Terraform Labs founder Do Kwon after describing his role in the failed Terra/Luna system as “colossal fraud,” citing major investor losses, his repeated denial of responsibility, and contested statements made during the collapse.
The sentencing request, filed by State Attorney Jay Clayton, adds to the ongoing legal pressure on Kwon and comes as regulators worldwide continue to confront the fallout from significant crypto failures that have pushed lawmakers toward unified enforcement standards.
Earlier Crypto Fraud Cases
Collapse of FTX
FTX founder Sam Bankman-Fried received a 25-year prison sentence in March 2024 for the sweeping fraud and conspiracy that brought down his crypto exchange and its affiliated hedge fund, Alameda Research. His case was charged in 2022, and a U.S. jury found him guilty on multiple counts, including fraud and conspiracy, in 2023.
More than $473 million was subsequently removed from FTX through what authorities described as an “unauthorized transfer.” After the exchange filed for bankruptcy in Nov 2022, the price of Bitcoin plunged by over 23%, from $20,600 to $15,900, sending shockwaves through the crypto market.
Related: SBF Insists “FTX Was Never Insolvent” in New Post
OneCoin Fraud
Before FTX fraud, OneCoin was one of the largest Web3 scams. Between 2014 and 2017, more than $4 billion was extracted from hundreds of thousands of investors worldwide. The scheme was led by Ruja Ignatova, widely referred to as the “Crypto Queen.”
Although early promoters in Bulgaria portrayed OneCoin as a genuine cryptocurrency similar to Bitcoin or Ethereum, the project never developed a real blockchain or a functional use case during its three-year run.
Thodex Scandal
Another Turkish crypto exchange, Thodex, abruptly suspended trading and withdrawals on April 21, 2021, claiming the pause would last only a few days for maintenance and partnership talks. Thodex’s CEO, Faruk Fatih Özer, left Turkey and went missing, while authorities launched an investigation into the platform.
Reports suggested that more than 390,000 users were unable to access their accounts. Turkish police subsequently detained dozens of people connected to the company as part of the investigation. Interpol issued a red notice for Özer, who was later captured in Albania in 2022 and extradited to Turkey.
In 2023, a Turkish court sentenced Özer to over 11,000 years in prison on charges including fraud, money laundering, and forming a criminal organization.
Centra Tech ICO Scam
Centra Tech was a cryptocurrency startup that launched an initial coin offering (ICO) in 2017, raising more than $25 million from investors. The founders fabricated executive identities, forged partnership documents, and misled investors about the product’s capabilities.
The project gained visibility after being promoted by celebrities such as Floyd Mayweather and DJ Khaled, who later faced penalties for failing to disclose paid endorsements. In 2018, U.S. authorities charged Centra Tech’s founders with securities fraud and wire fraud. One co-founder, Sohrab “Sam” Sharma, was sentenced to eight years in prison, and millions in investor funds were seized and later ordered to be returned.
The massive crypto fraud and collapses have raised alarm bells for regulatory bodies to draft further laws to protect investor funds. Across the globe, many crypto laws are being enacted to thwart fraud and support innovation in the sector.
