Do Kwon Sentenced to 15 Years for TerraUSD Fraud

On December 11, 2025, in a Manhattan federal court, Judge Paul A. Engelmayer sentenced Do Kwon to a 15-year prison term. This sentence came after Kwon pleaded guilty in August 2025 to conspiracy to defraud and wire fraud, charges that stemmed from the catastrophic failure of the TerraUSD (UST) stablecoin and Luna token in May 2022. As part of his plea agreement, Kwon agreed to forfeit approximately $19 million. The judge characterized the scheme as a “massive fraud,” a description underscored by prosecutors who detailed how Kwon misled investors about the fundamental mechanism that was supposed to maintain TerraUSD’s $1 peg.

The financial devastation was profound. Court documents and reports place the total market fallout at around $40 billion in erased value. During the sentencing hearing, victims provided emotional testimony, describing the loss of life savings and real financial ruin. This human toll appears to have weighed heavily on the court’s decision, with legal analysts noting that the 15-year term signals a strong judicial stance on the severity of the crime and its wide-reaching damage. The sentence exceeded the prosecution’s request for up to 12 years, reflecting the court’s view of the need for significant punishment and deterrence.

Parallel to the criminal proceedings, Do Kwon and Terraform Labs faced a major civil enforcement action from the U.S. Securities and Exchange Commission (SEC). In 2024, they agreed to a settlement requiring payments totaling more than $4.5 billion in disgorgement, interest, and civil penalties. Personally, Kwon was hit with an $80 million civil fine and a permanent ban from participating in crypto securities trading. This landmark civil judgment, filed before the criminal sentencing, has been utilized by regulators as a cornerstone in efforts to recover funds for defrauded investors.

The collapse of TerraUSD and Luna did not occur in isolation; it triggered a cascading loss of confidence that rippled through cryptocurrency markets, contributing to significant stress and failures at other crypto firms. The combined weight of the criminal sentence and the historic civil settlement represents one of the most comprehensive regulatory and legal responses to a crypto fraud to date. These actions are now central to the ongoing recovery efforts tied to Terraform Labs’ bankruptcy proceedings.

Do Kwon’s path to a Manhattan courtroom was a protracted international saga. After the Terra collapse, he left Singapore and was subsequently arrested in Montenegro in March 2023. Authorities reported he was detained while attempting to travel using forged travel documents. Kwon then engaged in a lengthy legal battle, fighting extradition through the Montenegrin court system. His efforts were ultimately unsuccessful, and he was transferred to the United States in late 2024 to face the federal charges.

This cross-border legal fight highlights the global nature of major cryptocurrency frauds and the increasing coordination among international law enforcement agencies. Despite the conclusion of the U.S. criminal case, Kwon still faces the possibility of separate investigations and potential charges in other countries, including his native South Korea. The 15-year prison sentence in the U.S., however, stands as the most significant legal consequence for his role in the Terra fraud, closing a major chapter in a case that has come to symbolize the risks and regulatory challenges within the cryptocurrency industry.