Do Kwon Sentenced to 15 Years for $50B Terra Collapse

Terraform Labs co-founder Do Kwon has been sentenced to 15 years in a U.S. federal prison for orchestrating one of the most devastating frauds in crypto history — a scheme that erased roughly $50 billion from the digital asset market in just three days during May 2022. The sentence, delivered by Judge Paul Engelmeyer of the Southern District of New York, exceeds the 12 years recommended by prosecutors and far surpasses the five-year term requested by Kwon’s defense team. Under federal rules, Kwon must serve at least half of his sentence before he can seek a transfer to South Korea, where additional criminal charges await him.

Victims of the TerraUSD (UST) collapse testified extensively during the hearing, describing severe financial and emotional harm. Kwon, who pleaded guilty in August, admitted to conspiring to commit commodities fraud, securities fraud, and wire fraud, as well as carrying out wire fraud tied to deceptive practices at Terraform Labs. He acknowledged knowingly misleading UST purchasers and contributing to a collapse that rippled across the entire crypto ecosystem.

Terraform Labs' failure marked the beginning of a widespread crypto meltdown that eventually led to the downfall of major industry players, including FTX. Former FTX CEO Sam Bankman-Fried is currently serving a 25-year sentence, while Celsius Network founder Alex Mashinsky is serving 12 years — making Kwon the latest high-profile figure held accountable for fraud in the digital asset sector.

Kwon originally faced a nine-count indictment carrying a potential 135-year maximum sentence. However, prosecutors reduced the charges to two in exchange for his guilty plea and agreed to recommend a 12-year term. They also committed to supporting a future transfer to South Korea once Kwon completes half of his sentence.

Ahead of sentencing, Judge Engelmeyer raised concerns about whether South Korea would enforce the remainder of Kwon’s U.S. sentence if transferred. Prosecutors noted that Korean officials declined to disclose their intended punishment but indicated Kwon still plans to contest charges there. The court also confirmed that the U.S. Bureau of Prisons will credit Kwon for the time he served in Montenegro beyond his four-month conviction for passport fraud, though the exact amount of credit remains undetermined.