Do Kwon, the South Korean co-founder of Terraform Labs, has been sentenced to 15 years in prison in the US. (File Photo)
Do Kwon, the South Korean co-founder of Terraform Labs, has been sentenced to 15 years in prison in the United States for fraud linked to the collapse of two major cryptocurrencies, The Guardian reported.
Kwon, pleaded guilty to two counts of conspiracy to defraud and wire fraud. His company had developed the TerraUSD stablecoin and the Luna token, which together wiped out an estimated $40bn in 2022 and helped trigger a wider crash in the crypto market.
Who is Do Kwon?
Kwon is a Stanford graduate who founded Terraform Labs in 2017 with business partner Daniel Shin. According to prosecutors, when TerraUSD slipped below its $1 peg in May 2021, Kwon told investors an algorithm called the “Terra Protocol” had restored it. Prosecutors said he instead arranged for a trading firm to secretly buy large amounts of the token to lift its price.
The collapse of TerraUSD and Luna was one of the major failures in the 2022 crypto downturn. Other crypto leaders have also faced charges, including Sam Bankman-Fried, who was sentenced to 25 years in prison in 2024.
The sentencing took place in New York. According to The Guardian, US district judge Paul Engelmayer said Kwon’s actions amounted to “a fraud of epic generational scale”. The judge also said the 12-year sentence requested by prosecutors would be “too lenient”.
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The judge told Kwon, “In the history of federal prosecutions very few cases have caused more monetary harm than you did.”
Kwon said in court that he accepted responsibility for the damage caused, adding: “The blame should be pointed at me for everyone’s suffering.” He told the court that he had spent years thinking about “what I could have done different and what I can do now to make things right”.
Kwon’s lawyers had asked for a sentence of no more than five years, arguing that he was trying to save TerraUSD rather than enrich himself. The judge called that request “wildly unreasonable”, The Guardian said.
Kwon has been held in US custody since his extradition from Montenegro last year, after being detained there for using a fake passport. As part of his plea deal, he has agreed to forfeit $19.3m and certain properties.
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Prosecutors told the court they would not seek restitution for the thousands of investors who lost money, saying the scale of the losses made accurate calculations impossible.
Judge Engelmayer said he had received letters from 315 victims worldwide, many of whom reported losing retirement savings, homes and funds meant for healthcare and education. He said some investors continued to believe in Kwon, describing their messages as resembling “the words of cult followers”.
Prosecutors said they may support Kwon serving the second half of his sentence in South Korea if he meets the terms of his plea agreement.
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Do Kwon, the South Korean co-founder of Terraform Labs, has been sentenced to 15 years in prison in the US. (File Photo) 
