Do Kwon, Crypto Entrepreneur Behind 2022 Terra Collapse, Sentenced to 15 Years in Prison

Former Terraform Labs CEO convicted of fraud after Luna and TerraUSD implosion

Do Kwon, the South Korean‑born founder of Terraform Labs, was sentenced on Tuesday to 15 years of federal imprisonment for orchestrating one of the most damaging frauds in the history of digital assets.

The court’s decision follows Kwon’s 2023 guilty plea to multiple counts, including wire fraud, securities fraud, and conspiracy to commit money‑laundering. The charges stem from the catastrophic failure of the algorithmic stablecoin TerraUSD (UST) and its associated token Luna, which together erased roughly $45 billion in market value in May 2022.

During the trial, prosecutors presented evidence that Kwon and his associates misrepresented the stability of UST, promising investors “rock‑solid” returns while secretly relying on a fragile mint‑and‑burn mechanism. When the peg broke, Luna’s price plummeted from an all‑time high of over $120 to fractions of a cent within days, triggering a wave of liquidations across the crypto ecosystem.

The judge highlighted the “wide‑reaching harm” caused by the scheme, noting that retail investors, institutional funds, and even unrelated blockchain projects suffered severe financial losses. “The deliberate deception and the scale of the fallout demand a punishment that reflects the gravity of the conduct,” the sentencing remarks read.

Kwon, who was arrested in Montenegro earlier this year and extradited to the United States, will also be ordered to forfeit assets estimated at more than $200 million, including cryptocurrency holdings, luxury vehicles, and real estate.

Legal analysts say the sentence sends a strong signal to the burgeoning crypto industry: regulators are prepared to pursue aggressive enforcement against founders who engage in fraudulent practices, regardless of the innovative veneer of their projects.

The ruling closes a tumultuous chapter for Terraform Labs, but the broader debate over stablecoin regulation and investor protection continues to dominate policy discussions worldwide.