TerraUSD Creator Do Kwon Sentenced to 15 Years Over $40 Billion Crypto Collapse
New York, December 11, 2025 — Do Kwon, the 34-year-old South Korean entrepreneur behind Terraform Labs and the ill-fated cryptocurrencies TerraUSD and Luna, has been sentenced to 15 years in prison in connection with one of the largest frauds in recent financial history. The U.S. District Judge Paul A. Engelmayer delivered the sentence Thursday in Manhattan federal court, condemning Kwon for orchestrating a massive deception that led to the collapse of digital assets worth approximately $40 billion in 2022. Epic Fraud and Breach of Trust
During the sentencing hearing, Judge Engelmayer sharply criticized Kwon for systematically lying to investors, many of whom were everyday people who had trusted him with their life savings. "This was a fraud on an epic, generational scale," the judge stated. "In the history of federal prosecutions, there are few frauds that have caused as much harm as you have, Mr. Kwon."
Kwon had previously pleaded guilty to charges of conspiracy to defraud and wire fraud, admitting that he misled investors about the stability of TerraUSD. The cryptocurrency was designed as a “stablecoin” intended to maintain a $1 value even amid volatile market conditions. Prosecutors alleged that Kwon concealed critical information and manipulated trading activity to maintain the coin’s price temporarily.
Details of the Scheme
In May 2021, when TerraUSD’s value slipped below its $1 peg, Kwon falsely assured investors that a computer algorithm called the “Terra Protocol” had restored stability. Instead, court documents revealed that he secretly arranged for a high-frequency trading firm to buy millions of dollars worth of TerraUSD, artificially inflating its price and misleading investors about the underlying health of the asset.
The fallout from the collapse was catastrophic, triggering a wider crypto market downturn and wiping out billions of dollars in investments. Prosecutors charged Kwon with nine criminal counts, including securities fraud, commodities fraud, wire fraud, and money laundering conspiracy.
Victims Speak Out
Hundreds of victims submitted letters to the court describing severe financial and personal hardships caused by the collapse. Among them was Ayyildiz Attila, who lost between $400,000 and $500,000. “My savings, my future, and the results of years of sacrifice disappeared,” Attila wrote. “I struggled to keep up with payments and responsibilities, and everything I had worked for was erased.”
Addressing the court in yellow prison attire, Kwon apologized for the losses. "All of their stories were harrowing and reminded me again of the great losses that I’ve caused. I want to tell these victims that I am sorry," he said sincerely.
Legal Outcomes and Future Proceedings
Following the hearing, U.S. Attorney Jay Clayton stated that Kwon devised elaborate schemes to inflate his cryptocurrencies’ values and then evaded accountability once his deception was exposed.
Prosecutors had sought a sentence of at least 12 years, citing the scope of the harm caused. Kwon’s defense requested a more lenient sentence of no more than five years, hoping he could return to South Korea to face local charges.
In 2024, Kwon agreed to pay an $80 million civil fine and accepted a ban from crypto transactions as part of a $4.55 billion settlement with the U.S. Securities and Exchange Commission (SEC). Additionally, as part of his plea deal, prosecutors indicated they would not oppose Kwon’s potential transfer abroad after he serves half of his U.S. sentence.
Kwon is also expected to face criminal charges in South Korea related to his activities.
Background
Do Kwon co-founded Terraform Labs, a Singapore-based company that developed the TerraUSD stablecoin and its sister cryptocurrency, Luna. The collapse of these coins in 2022 caused unprecedented losses and sent shockwaves through the cryptocurrency market, leading to heightened regulatory scrutiny worldwide.
Reporting by Jack Queen in New York; Editing by Noleen Walder, Daniel Wallis, and Tom Hogue.