Kwon pleaded guilty to charges of fraud and conspiracy to commit wire fraud. Engelmayer noted that when UST lost its peg in May 2021, Kwon falsely claimed that an algorithm had restored its value, while secretly arranging for a trading firm to purchase millions of dollars in UST to artificially inflate its price. The judge also criticized Kwon’s mocking behavior on social media, citing a Twitter post where he belittled investors.

Court Proceedings and Kwon’s Flight Attempts

During the trial, Engelmayer reviewed Kwon’s attempts to evade the law. Kwon traveled on false passports to Serbia and Montenegro before being caught en route to Dubai. The court described this as “despicable,” especially since he publicly encouraged retail investors to hold UST while he and close associates exited their positions.

Following the sentencing, Jay Clayton, head of the Southern District of New York for the U.S. Department of Justice, stated: “Do Kwon devised complex schemes to mislead investors and inflate the value of Terraform’s cryptocurrencies for his own benefit. Once exposed, he conducted a deceptive PR campaign, laundered proceeds from illegal schemes, and attempted to seek political protection abroad. Fraud is fraud, and our office will relentlessly pursue justice for investors, regardless of where perpetrators flee.”

In August, Kwon admitted to conspiring to commit commodities fraud, securities fraud, and wire fraud connected to Terraform Labs’ operations. In court, he acknowledged that he knowingly participated in a plan to defraud UST buyers. Kwon also expressed remorse: “I want everyone to know I have spent all my time thinking about what I could have done differently and what I can do now. It has been four years since the incident, and I haven’t seen my family in three. I want to serve my restitution in my own country.”

Investors and Legal Implications

Judge Engelmayer deemed the defense’s requested five-year sentence “utterly unreasonable.” He said even the government’s suggested 12-year term would not sufficiently deter Kwon or future fraudsters.

Factors considered in the court’s decision included:

• Total funds lost and number of victims

• Kwon’s attempts to evade the law

• Misleading and mocking conduct on social media

• Deceiving investors while protecting personal positions

The Terraform collapse is now recorded as one of the largest scandals in crypto history, and Kwon’s sentence sets a significant precedent for the digital asset industry.

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The post Do Kwon Sentenced to 15 Years for $40B Crypto Scandal appeared first on Coin Engineer.

Palafox’s $200 Million Bitcoin Ponzi Scheme  

Praetorian Group International (PGI) CEO Ramil Ventura Palafox lured investors by promising daily returns between 0.5% and 3%. He falsely claimed that PGI engaged in high-volume Bitcoin trading. In reality, the company recycled funds from new participants to pay earlier investors.  

From December 2019 to October 2021, more than 90,000 investors deposited at least $201 million into PGI. This included $30.3 million in cash and 8,198 BTC worth $171.5 million at the time. At least $62.7 million in investor losses were recorded. 

Luxury Spending with Investor Funds  

Court documents revealed that Palafox used investor money for personal luxuries instead of trading. Key expenses included:  

• $3 million on 20 luxury cars (Porsche, Lamborghini, Bentley, McLaren, Ferrari)  
• Over $6 million on homes in Las Vegas and Los Angeles  
• $329,000 on luxury hotel penthouses  
• Millions on designer goods from Gucci, Cartier, Rolex, and Hermès  
• At least $800,000 in cash and 100 Bitcoin transferred to a family member  
• These lavish purchases highlighted how investors’ funds fueled a fraudulent lifestyle.  

Court Proceedings and Sentencing  

According to the U.S. Department of Justice, Palafox pleaded guilty to wire fraud and money laundering. He is scheduled to be sentenced on February 3, 2026, in Virginia. He faces up to 40 years in prison, though federal judges typically impose sentences below the maximum.  

Under his plea deal, Palafox agreed to pay $62.7 million in restitution. Prosecutors compared the case to notorious Ponzi schemes like BitConnect, PlusToken, and OneCoin. Experts emphasized that the real issue is fraudulent behavior, not Bitcoin itself.  

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Bessent initially stated the U.S. would not make further Bitcoin purchases for its Strategic Reserve. Shortly after, he revised his remarks, creating market uncertainty. This caused a sudden wave of sell-offs. Coinglass data shows long positions suffered the most losses during this period. 

Ethereum and Bitcoin Lead Crypto Liquidations 

Ethereum’s liquidation dominance drew significant attention. Analysts link the losses to ETH’s recent surge toward all-time highs. Bitcoin briefly surpassed $124,000 before dropping below $120,000. Solana and XRP also recorded notable liquidations. This highlights the market’s sensitivity to government announcements. 

Bessent’s Strategic Reserve Remarks Impact Markets 

Bessent confirmed the government will halt all BTC sales and explore budget-neutral ways to expand the reserve. This marks a shift from prior administrations’ policies. Moreover, it aligns with the 2025 Strategic Bitcoin Reserve initiative launched under President Trump. Bessent also referenced broader asset management, including gold reserves. The U.S. holds 261.5 million ounces of gold, valued at $42.22 per ounce under the 1973 standard. 

These updates may ease medium-term supply pressure on BTC. However, large intraday liquidations increased short-term volatility. The crypto market remains highly responsive to top-level government decisions. 

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The post Bessent’s Bitcoin Comments Trigger $1B Crypto Sell-Off appeared first on Coin Engineer.

Coinbase Data Breach and Stock Losses 

On May 15, company disclosed that some customer support representatives were bribed, granting access to internal systems. This incident led to the theft of personal information from approximately 97,000 users, including names, addresses, email addresses, bank details, and identification documents. The attackers demanded a $20 million ransom, which Coinbase rejected, instead offering a $20 million reward for the capture of the perpetrators. 

Following the breach announcement, Coinbase’s stock price fell 7.2% to $244. The next day, it rose 9% to $266 but closed at $263.10 on May 23 after a 3.23% drop. This volatility indicates significant investor losses. The lawsuit also names CEO Brian Armstrong and CFO Alesia Haas as defendants, with investors claiming crypto exchange misled them by not disclosing the breaches promptly. 

Regulatory Issues in the UK 

The lawsuit highlights that Coinbase was fined $4.5 million by the UK’s Financial Conduct Authority (FCA) in 2024 for violating a 2020 agreement by onboarding high-risk customers. Nessler alleges Coinbase failed to disclose this violation during its IPO, claiming it artificially inflated the stock price and misled investors. 

Additionally, the company faces other lawsuits, including one in Illinois over improper biometric data collection. The company has not yet issued an official statement on these cases, but these events continue to impact Coinbase’s credibility and market value. 

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The post Coinbase Faces Class Action Shock: 2025 Data Breach  appeared first on Coin Engineer.