Crypto Mogul Do Kwon to Be Sentenced for Misleading Investors in $40 Billion Collapse
By The Associated Press | December 11, 2025
NEW YORK — Cryptocurrency entrepreneur Do Kwon, widely known as “the cryptocurrency king,” is set to be sentenced Thursday for defrauding investors who collectively lost billions following the spectacular collapse of his company’s crypto ecosystem in 2022. Kwon, the founder of Terraform Labs, pleaded guilty in a Manhattan federal court this past August to fraud charges linked to the $40 billion crash of Terraform’s crypto assets. His firm had aggressively promoted TerraUSD as a stablecoin—a digital currency supposedly pegged to stable assets to avoid volatile price swings. However, prosecutors revealed that this façade was misleading and unsustainable, resulting in widespread financial devastation and rippling crises throughout global cryptocurrency markets.
Prosecutors described Kwon’s offense as “colossal in scope,” stating his deception permeated nearly every element of Terraform’s business operations and left “a trail of financial destruction.” They highlighted the fact that investors around the world faced massive losses as TerraUSD sharply deviated from its $1 peg, leading to a catastrophic erosion of market value for both TerraUSD and its complementary crypto token, Luna.
Do Kwon, a South Korean national, has agreed under his plea deal to forfeit assets exceeding $19 million. While federal sentencing guidelines suggest a prison term of around 25 years for his crimes, prosecutors have recommended a 12-year sentence. They cited mitigating factors including Kwon’s guilty plea, ongoing legal proceedings in South Korea, and the period he has already served in Montenegro’s custody awaiting extradition.
Kwon’s defense attorneys urged the court to impose no more than a five-year sentence, arguing in court documents that their client’s actions arose more from hubris and desperation rather than greed. In a letter addressed to the judge, Kwon accepted full responsibility, stating, “I alone am responsible for everyone’s pain. The community looked to me to know the path, and I in my hubris led them astray.” He acknowledged that his “misrepresentations came from a brashness that is now a source of deep regret.”
The downfall of Terraform Labs sent shockwaves through the cryptocurrency sphere, with the Singapore-based company’s assets plummeting dramatically after initially gaining substantial market traction since its inception in 2018. Kwon’s arrest unfolded on March 23, 2023, in Montenegro, where he was detained traveling on a false passport. Soon after, he was extradited to the United States to face legal proceedings.
As the cryptocurrency community and investors await the sentencing, the case marks a significant milestone in regulatory efforts to hold crypto executives accountable for fraudulent activities.
Related Topics: Cryptocurrency, Terraform Labs, Crypto Fraud, Stablecoin Collapse
ABC News Live: Stay updated with 24/7 coverage of breaking news and live events at ABC News Network.