Do Kwon, the South Korean co-founder of Terraform Labs, was sentenced to 15 years in prison by a federal court in Manhattan on December 11, 2025 after guilty of fraud linked to the collapse of the TerraUSD stablecoin and its sister token, Luna.
According to court documents and news reportsthe judge described the scheme as a massive fraud that caused thousands of investors to suffer heavy losses.
Sentence and court decision
Judge Paul A. Engelmayer handed down the fifteen-year term after prosecutors pushed for a maximum sentence of twelve years and the defense asked for a much lighter term.
Do Kwon pleaded guilty in August 2025 to conspiracy to commit wire fraud and wire fraud, and as part of the plea, he agreed to forfeit approximately $19 million.
The U.S. Attorney’s Office says he has been found guilty investors misled about how the stablecoin maintained its $1 peg.
Scale of losses
Reports have estimated the impact of the Terra collapse on the market at approximately $40 billion in erased value. Many ordinary investors lost their life savings and some victims gave emotional testimony at the sentencing, describing real financial ruin.
News outlets and lawsuits link the May 2022 crash to a sudden loss of confidence that rippled through the markets and hurt other crypto companies.
Civil penalties and settlements
Before the criminal case reached this point, Kwon and Terraform faced a major civil lawsuit from the U.S. Securities and Exchange Commission.
According to the SEC, Terraform Labs and Kwon agreed to pay more than $4.5 billion in disgorgement, interest and penalties, while Kwon personally faced an $80 million civil fine and a ban on crypto trading.
That civil judgment was filed in 2024 and has been used by regulators as part of the overall effort to make investors whole.
International arrest and extradition
Kwon was arrested in Montenegro in March 2023 after leaving Singapore; authorities say he used forged travel documents during his arrest.
He fought extradition in Montenegrin courts but was eventually transferred to the US in late 2024 to face federal charges. Reports outline a long legal battle across borders that ended with his return to New York to answer criminal counts.
What the sentence means
Legal analysts say a Term of 15 years reflects the court’s belief that the fraud caused great harm and that punishment should discourage similar schemes. The victims’ statements at the sentencing appear to have weighed heavily.
Kwon continues to face separate investigations and possible charges in other countries, and the civil judgment means significant funds will be set aside for recovery efforts related to Terraform’s bankruptcy.
Featured image from Getty Images, chart from TradingView