Do Kwon Sentenced to 15 Years in U.S. Prison for $40 Billion Terra Fraud

Terraform Labs co-founder Do Kwon has been sentenced to 15 years in a U.S. federal prison for fraud and conspiracy related to the catastrophic collapse of the TerraUSD (UST) stablecoin and its sister token Luna in May 2022. The sentence, handed down by U.S. District Judge Paul Engelmeyer in New York, marks a landmark criminal outcome in the crypto industry.

The collapse erased an estimated $40 to $50 billion in market value and triggered a devastating chain reaction across the crypto market, contributing to the failures of major firms like FTX. Prosecutors had sought a 12-year term, while Kwon's defense argued for a maximum of five years. Judge Engelmeyer imposed a stricter 15-year sentence, citing the massive scale of investor losses and the global impact.

Kwon pleaded guilty in August 2025 after months of negotiations, consolidating a sprawling nine-count indictment into two charges. As part of his plea deal, he has agreed to forfeit over $19 million in fraud proceeds. He had previously settled with the U.S. Securities and Exchange Commission (SEC) for $4.55 billion in June 2024.

The sentencing hearing featured emotional testimony from victims of the Terra collapse, who described life-altering financial ruin, which the judge noted weighed heavily in his decision. Kwon was arrested in Montenegro in March 2023 and extradited to the U.S. in late 2024 or early 2025. Under the plea terms, he must serve at least half of his U.S. sentence before potentially being transferred to South Korea, where he also faces criminal charges.

This case, following the 25-year sentence for FTX's Sam Bankman-Fried, is seen as a pivotal moment for accountability in crypto, signaling that founders may face severe consequences for fraudulent practices that lead to massive investor losses.