Do Kwon Sentenced to 15 Years in Prison for $40B Fraud

13th December 2025 – Do Kwon, the co-founder of Terraform Labs, has been sentenced to 15 years in prison. A U.S. federal judge handed him the sentence on December 11 in New York.

Kwon pleaded guilty to conspiracy to defraud and wire fraud. These charges stem from the collapse of TerraUSD and LUNA, two cryptocurrencies he helped create. Their crash wiped out over $40 billion in market value and triggered the broader crypto meltdown in 2022.

Judge Calls It One of the Worst Frauds in U.S. History

Judge Paul Engelmayer called the case a “fraud of epic, generational scale.” He said Kwon’s actions caused more harm than most federal fraud cases ever seen. The judge gave him a longer sentence than the 12 years prosecutors had requested. He believed 12 years would not reflect the damage done to victims.

More than 300 victims sent letters to the court. Many lost their homes, savings, and retirement funds. Some even lost money set aside for medical bills or their children’s education.

The judge also noted that some victims still supported Kwon, even after his guilty plea. He compared their loyalty to cult-like behavior.

Kwon Apologizes in Court

In court, Kwon took responsibility. He admitted that his actions weren’t just poor judgment, but serious misconduct. He said he had spent years thinking about how he failed and what he could have done differently.

“The blame should be pointed at me,” he told the court. “I am sorry to everyone who suffered.”

Kwon’s lawyers asked for no more than five years in prison. They argued that he didn’t act out of greed, but tried to save the TerraUSD project. The judge rejected that request, calling it “wildly unreasonable.”

How the Fraud Worked

Kwon launched Terraform Labs in 2017. He built TerraUSD, a stablecoin designed to stay pegged to the U.S. dollar, and LUNA, a related token. In 2021, TerraUSD slipped below $1. Kwon claimed a self-balancing algorithm had fixed the issue.

In reality, he had used a high-frequency trading firm to secretly buy TerraUSD. This move temporarily pushed the price back up. Kwon did not tell investors the truth.

His false claims attracted more buyers. At its peak, LUNA’s market cap hit $50 billion. But the project soon unraveled. It collapsed in May 2022, sparking panic and losses across the entire crypto market. FTX and several other firms failed soon after.

Legal Fallout and What Comes Next

Kwon was arrested in Montenegro in 2023 for using a fake passport. He was later extradited to the United States.

As part of his plea deal, he agreed to give up $19.3 million and several properties linked to the fraud. He also settled with the SEC earlier in 2024. That deal included a $4.55 billion fine and a lifetime ban from crypto activity.

U.S. prosecutors said they would support a transfer to South Korea after Kwon serves half his sentence. He still faces criminal charges there.

Authorities chose not to pursue restitution for the $40 billion in investor losses. They said it would be too complex to calculate how much each person lost.

Kwon is one of many crypto leaders to face jail time after the 2022 crash. FTX founder Sam Bankman-Fried was sentenced to 25 years earlier this year.