Do Kwon, the co-founder of Terraform Labs, has been sentenced to 15 years in prison for fraud, with a New York judge imposing a term that exceeded what prosecutors had requested. Kwon had pleaded guilty to conspiracy to defraud and wire fraud charges.

The sentence imposed on the 34-year-old South Korean entrepreneur was described in a December 12, 2025 report by The Guardian. Kwon developed TerraUSD and Luna, cryptocurrencies whose collapse left investors with $40bn in losses. TerraUSD was an algorithmic stablecoin, a token designed to hold its $1 peg through an algorithmic tied to Luna rather than through reserves, and its 2022 failure became one of the crypto industry's defining collapses, drawing regulatory scrutiny of stablecoin designs worldwide.

Judge Exceeds Prosecutors' Request

US district judge Paul Engelmayer described Kwon's crimes as "a fraud of epic generational scale." He said the 12 years sought by prosecutors would be too lenient given the harm suffered by victims.

"In the history of federal prosecutions very few cases have caused more monetary harm than you did," the judge said.

Kwon's lawyers had asked for no more than five years, arguing that he had sought to support TerraUSD rather than enrich himself. Engelmayer called that request "wildly unreasonable."

The 15-year term is among the longest imposed in US crypto fraud prosecutions, approaching the 25-year sentence given to Sam Bankman-Fried in 2024 for fraud tied to FTX, the exchange that collapsed in November 2022.

The judge said he received letters from 315 victims around the world, many of whom reported losing homes, retirement savings, money for medical expenses and college funds.

Engelmayer added that some investors continued to believe in Kwon even after his guilty plea, comparing his reading of some of their letters to "reading the words of cult followers."

Kwon Accepts Responsibility in Court

At the hearing, Kwon said he would not defend his conduct as industry standard or market practice. Even if those practices were widespread, he said, they were bad practices for which he should take responsibility.

"The blame should be pointed at me for everyone's suffering," he said.

He added that he had spent almost every waking moment considering what he could have done differently, and thinking about what he could do to make things right.

The US government argued that Kwon's fraudulent actions and his treatment of customers contributed to the crypto winter of 2022, and that they also contributed to the failure of Sam Bankman-Fried's FTX.

Prosecutors Allege Secret Support for TerraUSD

Kwon launched the startup that became Terraform Labs in 2017 alongside co-founder Daniel Shin. Prosecutors alleged that he misled investors when TerraUSD slipped below its $1 peg in May 2021.

According to prosecutors, Kwon told investors that a computer algorithm known as the Terra Protocol had restored the coin's value. They alleged instead that he secretly arranged token purchases by a high-frequency trading company to support the price.

Prosecutors said that claim, among others, encouraged retail and institutional purchases of Terraform products, which they alleged helped lift Luna's value to $50bn by the spring of 2022.

Plea Deal Covers Forfeiture and Possible Transfer

Kwon had been in US custody since his extradition from Montenegro last year, the Guardian reported. Montenegro had imprisoned him for using a fake passport.

Under his plea agreement, Kwon agreed to forfeit $19.3m as well as properties that prosecutors said he had gained through the fraud. Prosecutors said they would not seek investor restitution, because determining individual losses would be too complex.

They also said they would support Kwon serving the second half of his sentence in South Korea if he complies with the terms of his plea. According to the report, Do Kwon still faces charges in South Korea despite his sentencing in New York. That unresolved case, together with any decision on transferring the second half of the sentence to South Korea, marks the next phase to watch as the US criminal proceedings conclude.