With Do Kwon sentenced to 15 years for fraud, a New York judge exceeded prosecutors’ requested prison term. The Terraform Labs co-founder pleaded guilty to conspiracy to defraud and wire fraud charges.
The Guardian’s December 12, 2025 report described the sentence imposed on the South Korean entrepreneur, 34. Kwon developed TerraUSD and Luna, currencies whose collapse left investors with $40bn in losses.
Do Kwon Sentenced Beyond Prosecutors’ Request
US district judge Paul Engelmayer described Kwon’s crimes as “a fraud of epic generational scale.” The judge said prosecutors’ requested 12 years would be too lenient given the harm to victims.
“In the history of federal prosecutions very few cases have caused more monetary harm than you did,” he said.
Kwon’s lawyers requested no more than five years, arguing that he sought to support TerraUSD rather than enrich himself. Engelmayer called that request “wildly unreasonable.”
The judge said he received letters from 315 victims around the world. Many reported losing homes, retirement savings, money for medical expenses and college funds.
Engelmayer also said some investors continued believing in Kwon after his guilty plea. He compared reading some of their letters to “reading the words of cult followers.”
Kwon Accepted Responsibility At The Hearing
Kwon said he would not defend his conduct as industry standard or market practice. Even if those practices were widespread, he said, they were bad practices for which he should take responsibility.
“The blame should be pointed at me for everyone’s suffering.”
He also said he had spent almost every waking moment considering what he could have done differently. Kwon said he had been thinking about what he could do to make things right.
The US government argued his fraudulent actions and treatment of customers contributed to the crypto winter of 2022. It also argued those actions contributed to the failure of Sam Bankman-Fried’s FTX.
Related reporting follows Bankman-Fried’s new-trial request, Shetty’s crypto fraud sentence, and Key Coin Assets investor losses.
Prosecutors Described Secret Support For TerraUSD
Kwon launched the startup that became Terraform Labs in 2017 with co-founder Daniel Shin. Prosecutors alleged he misled investors when TerraUSD slipped below its $1 peg in May 2021.
Kwon told investors a computer algorithm called Terra Protocol restored the coin’s value, prosecutors said. Instead, they alleged, he secretly arranged token purchases by a high-frequency trading company to support the price.
Prosecutors said that claim and others encouraged retail and institutional purchases of Terraform products. They alleged those purchases helped boost Luna’s value to $50bn by the spring of 2022.
Plea Deal Includes Forfeiture And Possible Transfer
Kwon had been in US custody since extradition from Montenegro last year, the Guardian reported. Montenegro had imprisoned him for using a fake passport.
Under his plea, Kwon agreed to forfeit $19.3m and properties prosecutors said he gained through fraud. Prosecutors said they would not seek investor restitution because determining individual losses would be too complex.
Prosecutors said they would support him serving the second half of his sentence in South Korea if he follows his plea terms. Do Kwon, sentenced in New York, still faces charges in South Korea, according to the report.
