Do Kwon Sentencing Today: Terra Founder Faces 12-Year Prison Term

The sentencing of Do Kwon represents the legal culmination of one of the most catastrophic failures in the cryptocurrency sector. In 2022, the algorithmic stablecoin ecosystem he built, centered on TerraUSD (UST) and its sister token LUNA, imploded. Unlike traditional stablecoins like USDC or USDT, which are backed by reserves, UST’s value was maintained by a complex algorithmic relationship with LUNA. When this mechanism failed, it triggered a death spiral, wiping out an estimated $40 billion in investor capital. The shockwaves from this collapse reverberated throughout the market, contributing to the subsequent failures of major crypto entities like the FTX exchange and Celsius Network.

Kwon’s journey to this Manhattan courtroom was an international saga. Following the collapse, he became a fugitive, evading authorities across multiple jurisdictions. His run from the law took him through Singapore and the United Arab Emirates before he was finally apprehended in Montenegro in March 2023 while attempting to travel using a forged passport. After a lengthy extradition process, he was sent to the United States in December 2024 to face justice, setting the stage for today’s sentencing hearing before U.S. District Judge Paul Engelmayer.

The sentencing recommendations presented to the court paint starkly different pictures of Kwon’s culpability. Federal sentencing guidelines, as reported by AP News, suggest a prison term of approximately 25 years for crimes of this magnitude. However, prosecutors have requested a sentence of 12 years. In their filings, they cited mitigating factors including Kwon’s guilty plea in August to conspiracy to commit commodities fraud, securities fraud, and wire fraud, the time he already served in Montenegrin custody, and the expectation that he will also face separate criminal charges in his native South Korea.

In a dramatic personal appeal, Kwon’s legal team has argued for a sentence limited to just five years. Their defense hinges on the claim that his conduct was not primarily driven by greed, but by “hubris and desperation.” This argument finds an echo in Kwon’s own words from a letter submitted to Judge Engelmayer. “I alone am responsible for everyone’s pain,” Kwon wrote. “The community looked to me to know the path, and I in my hubris led them astray.” He further attributed his false claims about Terraform Labs’ blockchain products to a “brashness that is now a source of deep regret.” As part of his plea deal, Kwon has also agreed to forfeit $19.3 million and several properties.

Kwon’s sentencing places him within a growing roster of high-profile cryptocurrency executives facing severe legal consequences, though the outcomes have varied widely. The benchmark for severe punishment was set in March 2024 when FTX founder Sam Bankman-Fried was sentenced to 25 years in prison for his role in the multi-billion dollar fraud at his exchange. More recently, in May 2025, Alex Mashinsky, the former CEO of crypto lender Celsius, received a 12-year sentence.

Other cases have resulted in lighter penalties. Binance founder Changpeng Zhao was sentenced to just four months in federal prison in April 2024 for failing to maintain an effective anti-money laundering program, a charge distinct from the fraud allegations faced by Kwon and Bankman-Fried. Notably, Zhao was pardoned by President Donald Trump in October 2025. The disparity in these sentences underscores how courts are weighing different types of misconduct—direct fraud versus regulatory failures—in the still-evolving legal landscape of digital assets. Today’s decision for Do Kwon will add a critical data point to this pattern, defining the price of hubris and fraud in the collapse of a $40 billion ecosystem.