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Do Kwon sentenced to 15 years in prison for $40 billion stablecoin fraud
Court Watch |
2025/12/11 21:52
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Onetime cryptocurrency mogul Do Kwon was sentenced Thursday to 15 years in prison after a $40 billion crash revealed his crypto ecosystem to be a fraud. Victims said the 34-year-old financial technology whiz weaponized their trust to convince them that the investment — secretly propped up by cash infusions — was safe.
Kwon, a Stanford graduate known by some as “the cryptocurrency king,” apologized after listening as victims — one in court and others by telephone — described the scam’s toll: wiping out nest eggs, depleting charities and wrecking lives. One told the judge in a letter that he contemplated suicide after his father lost his retirement money in the scheme.
Judge Paul A. Engelmayer said at a daylong sentencing hearing in Manhattan federal court that the government’s recommendation of 12 years in prison was “unreasonably lenient” and that the defense’s request for five years was “utterly unthinkable and wildly unreasonable.” Kwon faced a maximum sentence of 25 years in prison.
“Your offense caused real people to lose $40 billion in real money, not some paper loss,” Engelmayer told Kwon, who sat at the defense table in a yellow jail suit. The judge called it “a fraud on an epic, generational scale” and said Kwon had an “almost mystical hold” on investors and caused incalculable “human wreckage.”
Kwon pleaded guilty in August to fraud charges stemming from the collapse of Terraform Labs, the Singapore-based firm he co-founded in 2018. The loss exceeded the combined losses from FTX founder Sam Bankman-Fried and OneCoin co-founder Karl Sebastian Greenwood’s frauds, prosecutors said. Engelmayer estimated there may have been a million victims.
Terraform Labs had touted its TerraUSD as a reliable “stablecoin” — a kind of currency typically pegged to stable assets to prevent drastic fluctuations in prices. But prosecutors say it was an illusion backed by outside cash infusions that came crumbling down after it plunged far below its $1 peg. The crash devastated investors in TerraUSD and its floating sister currency, Luna, triggering “a cascade of crises that swept through cryptocurrency markets.”
Kwon tried to rebuild Terraform Labs in Singapore before fleeing to the Balkans on a false passport, prosecutors said. He’s been locked up since his March 2023 arrest in Montenegro. He was credited for 17 months he spent in jail there before being extradited to the U.S.
Kwon agreed to forfeit over $19 million as part of his plea deal. His lawyers argued his conduct stemmed not from greed, but hubris and desperation. Engelmayer rejected his request to serve his sentence in his native South Korea, where he also faces prosecution and where his wife and 4-year-old daughter live.
“I have spent almost every waking moment of the last few years thinking of what I could have done different and what I can do now to make things right,” Kwon told Engelmayer. Hearing from victims, he said, was “harrowing and reminded me again of the great losses that I have caused.”
One victim, speaking by telephone, said his wife divorced him, his sons had to skip college, and he had to move back to Croatia to live with his parents after TerraUSD’s crash evaporated his family’s life savings. Another said he has to “live with the guilt” of persuading his in-laws and hundreds of nonprofit organizations to invest.
Stanislav Trofimchuk said his family’s investment plummeted from $190,000 to $13,000 — “17 years of our life, gone” during what he described as “two weeks of sheer terror.”
Chauncey St. John, speaking in court, said some nonprofits he worked with lost more than $2 million and a church group lost about $900,000. He and his wife are saddled with debt and his in-laws have been forced to work well past their planned retirement, he said.
Nevertheless, St. John said, he forgives Kwon and “I pray to God to have mercy on his soul.”
A prosecutor read excerpts from some of more than 300 letters submitted by victims, including a person identified only by initials who lost nearly $11,400 while juggling bills and trying to complete college. Kwon had made Terra seem like a safe place to stash savings, the person said.
“To some that is just a number on a page, but to me it was years of effort,” the person wrote. “Watching it evaporate, literally overnight, was one of the most terrifying experiences of my life.”
“What happened was not an accident. It was not a market event. It was deception,” the person added, imploring the judge to “consider the human cost of this tragedy.”
Kwon created an “illusion of resilience while covering up systemic failure,” Assistant U.S. Attorney Sarah Mortazavi told Engelmayer. “This was fraud executed with arrogance, manipulation and total disregard for people.”
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Court official dismisses Justice Department’s misconduct complaint
Court Watch |
2025/11/28 21:37
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A court official has dismissed a Justice Department complaint that accused a federal judge of “hostile and egregious” misconduct during hearings for a lawsuit challenging President Donald Trump’s ban on transgender troops serving in the military.
The complaint accused U.S. District Judge Ana Reyes in Washington, D.C., of inappropriately questioning a government lawyer about his religious beliefs and of trying to embarrass the attorney with a rhetorical exercise during a February hearing.
In a Sept 29 order that wasn’t made public until Monday, Chief Judge Sri Srinivasan of the U.S. Court of Appeals for the District of Columbia Circuit dismissed the complaint. Srinivasan said a motion for Reyes’ recusal would have been the proper means for the Justice Department to contest her impartiality and seek her removal from the case.
The department didn’t explicitly ask for Reyes’ removal from the transgender troops’ litigation. And it didn’t file a petition for a review of the chief judge’s order, which didn’t reach any conclusions about the merits of the complaint’s allegations.
“If a party that believes a judge’s conduct in a case raises serious questions about her impartiality were to press its concerns in the ordinary way — by seeking her recusal in the case itself — the standards for resolving the matter are well established,” Srinivasan wrote.
The Justice Department had no immediate comment on Tuesday. Reyes declined to comment on the chief judge’s order or the department’s complaint.
The complaint was filed by Attorney General Pam Bondi’s then-chief of staff, Chad Mizelle, who has since left the department. Mizelle claimed Reyes’ behavior “compromised the dignity of the proceedings and demonstrated potential bias.”
“When judges demonstrate apparent bias or treat counsel disrespectfully, public confidence in the judicial system is undermined,” he wrote.
Mizelle’s complaint cited an exchange in which Reyes asked a government attorney: “What do you think Jesus would say to telling a group of people that they are so worthless, so worthless that we’re not going to allow them into homeless shelters? Do you think Jesus would be, ‘Sounds right to me’?” The attorney responded by saying, “The United States is not going to speculate about what Jesus would have to say about anything.”
The complaint also refers to a rhetorical exercise about discrimination. Reyes spoke of changing the rules in her courtroom to bar graduates of the University of Virginia law school from appearing before her because they are all “liars and lack integrity.” She instructed the government attorney, a graduate of the school, to sit down before calling him back up to the podium.
Reyes was nominated to the bench by President Joe Biden, a Democrat. Trump and Republican allies have mounted an escalating series of attacks against the federal judiciary since the start of his second term.
Trump’s Jan. 27 executive order claims without presenting evidence that the sexual identity of transgender service members “conflicts with a soldier’s commitment to an honorable, truthful, and disciplined lifestyle, even in one’s personal life” and is harmful to military readiness. It required Defense Secretary Pete Hegseth to issue a revised policy.
Six transgender people who were active-duty service members and two other plaintiffs seeking to join the military sued to challenge Trump’s order. Reyes blocked the order’s enforcement in March, ruling that it likely violates the plaintiffs’ constitutional rights. A federal judge in Washington state also blocked enforcement of the order.
Reyes agreed to suspend her order pending the government’s appeal, which hasn’t been resolved yet. But the U.S. Supreme Court has allowed the Trump administration to ban transgender people from the military in the meantime. |
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Kimberly-Clark buying Tylenol maker Kenvue in $48.7 billion deal
Court Watch |
2025/11/07 08:52
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Kimberly-Clark is buying Tylenol maker Kenvue in a cash and stock deal worth about $48.7 billion, creating a massive consumer health goods company.
Shareholders of Kimberly-Clark will own about 54% of the combined company. Kenvue shareholders will own about 46%.
The combined company will have a large stable of household brands under one roof, putting Kenvue’s Listerine mouthwash and Band-Aid side-by-side with Kimberly-Clark’s Cottonelle toilet paper, Huggies and Kleenex tissues. It will also generate about $32 billion in annual revenue.
Kenvue has spent a relatively brief period as an independent company, having been spun off by Johnson & Johnson two years ago. J&J first announced in late 2021 that it was splitting its consumer health division from the pharmaceutical and medical device divisions.
The deal announced Monday is among the largest corporate takeovers of the year.
Kenvue was thrust into the national spotlight last month when Health Secretary Robert F. Kennedy, Jr. reasserted the unproven link between the pain reliever Tylenol and autism, and suggested people who opposed the theory were motivated by hatred for President Donald Trump.
During a meeting with Trump and the Cabinet, Kennedy reiterated the connection, even while noting there was no medical proof to substantiate the claim.
In July Kenvue, announced that CEO Thibaut Mongon was leaving in the midst of a strategic review with the company under mounting pressure from activist investors. Board member Kirk Perry is serving as interim CEO.
“We will serve billions of consumers across every stage of life,” Kimberly-Clark Chairman and CEO Mike Hsu said in a statement.
Hsu will be chairman and CEO of the combined company. Three members of the Kenvue’s board will join Kimberly-Clark’s board at closing. The combined company will keep Kimberly-Clark’s headquarters in Irving, Texas and continue to have a significant presence in Kenvue’s locations.
The deal is expected to close in the second half of next year. It still needs approval from shareholders of both both companies.
Kenvue shareholders will receive $3.50 per share in cash and 0.14625 Kimberly-Clark shares for each Kenvue share held at closing. That amounts to $21.01 per share, based on the closing price of Kimberly-Clark shares on Friday.
Kimberly-Clark and Kenvue said that they identified about $1.9 billion in cost savings that are expected in the first three years after the transaction’s closing.
Shares of Kimberly-Clark slipped more than 15% before the market open, while Kenvue’s stock jumped more than 20%.
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Luigi Mangione’s lawyers seek dismissal of federal charges in assassination
Court Watch |
2025/10/15 08:40
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Lawyers for Luigi Mangione asked a New York federal judge Saturday to dismiss some criminal charges, including the only count for which he could face the death penalty, from a federal indictment brought against him in the December assassination of UnitedHealthcare’s chief executive.
In papers filed in Manhattan federal court, the lawyers said prosecutors should also be prevented from using at trial his statements to law enforcement officers and his backpack where a gun and ammunition were found.
They said Mangione was not read his rights before he was questioned by law enforcement officers, who arrested him after Brian Thompson was fatally shot as he arrived at a Manhattan hotel for an investor conference.
They added that officers did not obtain a warrant before searching Mangione’s backpack.
Mangione, 27, has pleaded not guilty to state and federal charges in the fatal shooting of Brian Thompson on Dec. 4 as he arrived at a Manhattan hotel for his company’s annual investor conference.
The killing set off a multi-state search after the suspected shooter slipped away from the scene and rode a bike to Central Park, before taking a taxi to a bus depot that offers service to several nearby states.
Five days later, a tip from a McDonald’s about 233 miles (375 kilometers) away in Altoona, Pennsylvania, led police to arrest Mangione. He has been held without bail since then.
In their submission, defense lawyers provided a minute-by-minute description of how police officers apprehended a cooperative Mangione, including a photograph from a police body-worn camera of the suspect initially sitting alone at a table with a white mask covering nearly all of his face.
They said Mangione was first approached by two “fully armed” police officers when one of them “told Mr. Mangione that someone had called the police because they thought he was suspicious” after he’d been there about 40 minutes.
When the officers asked to see his identification, Mangione turned over a New Jersey driver’s license with someone else’s name, according to the filing.
As Mangione prepared to eat his food, the officers asked him to stand up with his hands atop his head so they could frisk him, the lawyers wrote.
Soon afterward, one of the officers went outside to summon more officers, telling a colleague he was “100 percent” convinced that Mangione was the suspect they were looking for, the lawyers said. Within minutes, nearly a half dozen additional officer arrived.
Last month, lawyers for Mangione asked that his federal charges be dismissed and the death penalty be taken off the table as a result of public comments by U.S. Attorney General Pam Bondi. In April, Bondi directed prosecutors in New York to seek the death penalty, calling the killing of Thompson a “premeditated, cold-blooded assassination that shocked America.”
Murder cases are usually tried in state courts, but prosecutors have also charged Mangione under a federal law on murders committed with firearms as part of other “crimes of violence.” It’s the only charge for which Mangione could face the death penalty, since it’s not used in New York state.
The papers filed early Saturday morning argued that this charge should be dismissed because prosecutors have failed to identify the other offenses that would be required to convict him, saying that the alleged other crime — stalking — is not a crime of violence.
The assassination and its aftermath have captured the American imagination, setting off a cascade of resentment and online vitriol toward U.S. health insurers while rattling corporate executives concerned about security.
After the killing, investigators found the words “delay,” “deny” and “depose,” written in permanent marker on ammunition at the scene. The words mimic a phrase used by insurance industry critics. |
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Call of Duty Maker Seeks Dismissal in Texas School Shooting Case
Court Watch |
2025/09/16 13:00
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A lawyer for the maker of the video game Call of Duty argued Friday that a judge should dismiss a lawsuit brought by families of the victims of the Robb Elementary School attack in Uvalde, Texas, saying the contents of the war game are protected by the First Amendment.
The families sued Call of Duty maker Activision and Meta Platforms, which owns Instagram, saying that the companies bear responsibility for promoting products used by the teen gunman.
Three sets of parents who lost children in the shooting were in the audience at the Los Angeles hearing.
Activision lawyer Bethany Kristovich told Superior Court Judge William Highberger that the “First Amendment bars their claims, period full stop.”
“The issues of gun violence are incredibly difficult,” Kristovich said. “The evidence in this case is not.”
She argued that the case has little chance of prevailing if it continues, because courts have repeatedly held that “creators of artistic works, whether they be books, music, movies, TV or video games, cannot be held legally liable for the acts of their audience.”
The lawsuit, one of many involving Uvalde families, was filed last year on the second anniversary of one of the deadliest school shootings in U.S. history. The gunman killed 19 students and two teachers. Officers finally confronted and shot him after waiting more than an hour to enter the fourth-grade classroom.
Kimberly Rubio, whose 10-year-old daughter Lexi was killed in the shooting, was among the parents who came from Texas to Southern California, where Activision is based, for the hearing.
“We traveled all this way, so we need answers,” Rubio said outside the courthouse. “It’s our hope that the case will move forward so we can get those answers.”
An attorney for the families argued during the hearing that Call of Duty exceeds its First Amendment protections by moving into marketing.
“The basis of our complaint is not the existence of Call of Duty,” Katie Mesner-Hage told the judge. “It is using Call of Duty as a platform to market weapons to minors.”
The plaintiffs’ lawyers showed contracts and correspondence between executives at Activison and gunmakers whose products, they said, are clearly and exactly depicted in the game despite brand names not appearing.
Mesner-Hage said the documents show that they actually prefer being unlabeled because “it helps shield them from the implication that they are marketing guns to minors,” while knowing that players will still identify and seek out the weapons.
Kristovich said there is no evidence that the kind of product placement and marketing the plaintiffs are talking about happened in any of the editions of the game the shooter played.
The families have also filed a lawsuit against Daniel Defense, which manufactured the AR-style rifle used in the May 24, 2022, shooting. Koskoff argued that a replica of the rifle clearly appears on a splash page for Call of Duty.
Josh Koskoff, the families’ Connecticut-based lead attorney, also represented families of nine Sandy Hook Elementary School shooting victims in a lawsuit against gunmaker Remington and got a $73 million lawsuit settlement.
He invoked Sandy Hook several times in his arguments, saying the shooters there and in Uvalde shared the same gaming obsession.
Koskoff said the Uvalde shooter experienced “the absorption and the loss of self in Call of Duty.”
He said that immersion was so deep that the shooter searched online for how to obtain an armored suit that he didn’t know only exists in the game.
Koskoff played a clip from Call of Duty Modern Warfare, the game the shooter played, with a first-person shooter gunning down opponents.
The shots echoed loudly in the courtroom, and several people in the audience slowly shook their heads.
“Call of Duty is in a class of its own,” Koskoff said.
Kristovich argued for Activision that the game, despite its vast numbers of players, can be tied to only a few of the many U.S. mass shootings.
“The game is incredibly common. It appears in a scene on ‘The Office,’” she said. She added that it is ridiculous to assert that “this is such a horrible scourge that your honor has to essentially ban it through this lawsuit.”
Highberger told the lawyers he was not leaning in either direction before the hearing. He gave no time frame for when he will rule, but a quick decision is not expected.
The judge did tell the plaintiffs’ lawyers that their description of Activision’s actions seemed like deliberate malfeasance, where their lawsuit alleges negligence. He said that was the biggest hurdle they needed to clear.
“Their conduct created a risk of exactly what happened,” Mesner-Hage told him. “And we represent the people who are exactly the foreseeable victims of that conduct.”
Meta’s attorneys will make arguments on a similar motion next month.
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