Do Kwon, the South Korean co-founder of Terraform Labs, was sentenced to 15 years in prison on December 11, 2025 in a Manhattan federal court after pleading guilty to fraud tied to the collapse of the TerraUSD stablecoin and its sister token, Luna.

According to court documents and news reports, the judge described the scheme as a massive fraud that left thousands of investors facing heavy losses.

Judge Paul A. Engelmayer handed down the 15-year term after prosecutors urged for a sentence of up to 12 years and the defense asked for a much lighter term.

Do Kwon pleaded guilty in August 2025 to conspiracy to defraud and wire fraud, and as part of the plea he agreed to forfeit roughly $19 million.

The US Attorney’s office says the guilty plea admits he misled investors about how the stablecoin kept its $1 peg.

Reports have placed the market fallout from the Terra collapse at about $40 billion in erased value. Many ordinary investors lost life savings and some victims gave emotional testimony at sentencing, describing real financial ruin.

News outlets and court filings tie the crash in May 2022 to a sudden loss of confidence that cascaded through markets and hurt other crypto firms.

Before the criminal case reached this point, Kwon and Terraform faced a major civil action from the US 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 from 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.

Kwon was arrested in Montenegro in March 2023 after leaving Singapore; authorities say he was using forged travel documents when detained.

He fought extradition in Montenegrin courts but was eventually transferred to the US late in 2024 to face federal charges. Reports outline a long legal fight across borders that ended with his return to New York to answer criminal counts.

Legal analysts say a 15-year term signals the court’s view that the fraud caused wide damage and that punishment should deter similar schemes. Victims’ statements at sentencing appear to have weighed heavily.

Kwon still faces separate probes and possible charges in other countries, and the civil judgment means substantial sums are earmarked for recovery efforts tied to Terraform’s bankruptcy.

Featured image from Getty Images, chart from TradingView

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