Do Kwon Gets 15-Year Sentence for Terraform Collapse

Do Kwon received a 15-year prison sentence for his role in the Terraform collapse. The judge described the $40 billion fraud as an “epic, generational scale” crime.

Do Kwon, the co-founder of Terraform Labs, was sentenced to 15 years in prison on Thursday, December 11, 2025. The sentencing was in a federal court in the US. The conviction is connected with fraud and conspiracy in the $40 billion collapse of his TerraUSD and Luna cryptocurrencies in 2022.

Judge Engelmayer Cites “Epic, Generational Scale” of Fraud

U.S. District Judge Paul A. Engelmayer presided over a daylong sentencing hearing. He ended up giving him a 15-year prison sentence. This was longer than the 12 years the prosecutors had wanted. It was also significantly more than the five years that Kwon’s defense team sought.

Judge Engelmayer called Kwon’s crimes in stark terms. He described the offense as a “fraud on an epic, generational scale.” The judge emphasized that the offense resulted in “real people losing $40 billion in real money.” He also noted the “almost mystical hold” Kwon had on investors that caused incalculable “human wreckage.”

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For four years, Kwon was able to mislead the market on purpose. He made the stablecoin mechanism stable. Furthermore, he hid an important support structure with Jump Trading. In addition, this deception ultimately led to losses exceeding $40 billion. It also affected hundreds of thousands of investors worldwide.

Before making his sentencing decision, Engelmayer heard from some of Terraform’s victims. Victims described the toll of the scam. This included wiping out nest eggs and making a severe dent in charities. Many people sent each other deeply emotional letters.

On the other hand, Kwon spoke before the court prior to his sentence being delivered. “I want everybody to know I’ve spent all my time thinking, what I could have done, what I can do,” he said. He said he wants to finish his penance in his home country of South Korea.

Sentencing Details Include Forfeiture and Civil Settlement

Kwon in August 2025 pleaded guilty to two counts. These counts were conspiracy to defraud and wire fraud. He had originally been facing nine criminal counts. These had a potential maximum sentence of up to 130 years.

As part of his plea agreement, Kwon had agreed to a major forfeiture. He will lose more than $19 million in receipts from his illegal schemes. This money will go towards compensating victims.

In a separate civil action in 2024, Kwon and Terraform Labs settled. This was with the US Securities and Exchange Commission (SEC). The agreement obliges them to pay around $4.55 billion. However, this sum is to be distributed to the victims.

Meanwhile, Kwon was extradited to the U.S from Montenegro late in 2024. He was arrested in March 2023 for travelling on a false passport. In addition, he will be credited for the 17 months of pre-extradition custody he served. He may be entitled to serve the remainder of his sentence in South Korea. However, this is after he has served at least half of his term in the U.S. He is also facing separate criminal charges there.

Lastly, the TerraUSD stablecoin was intended to keep up a $1 value. When its price dropped in May 2021, Kwon covertly arranged for a high-frequency trading company to buy millions of tokens. This artificially inflated the price. He publicly said the algorithm had restored the peg. This fraud played a part in the demise of other big firms such as FTX.

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