Do Kwon Sentenced to 15 Years for Wire Fraud: Terraform Labs Chief Faces Justice

Do Kwon, the South Korean co-founder of Terraform Labs, has been sentenced to 15 years in prison on December 11, 2025, in a Manhattan federal court. His conviction stems from his guilty plea to fraud related to the collapse of the TerraUSD stablecoin and its companion token, Luna.

Key Takeaways

Do Kwon, co-founder of Terraform Labs, received a 15-year prison sentence for wire fraud.
He pled guilty to conspiracy and fraud related to the collapse of TerraUSD and Luna.
The Terra collapse resulted in around $40 billion in losses for investors.
The SEC took civil action against Kwon, leading to additional financial penalties.
Kwon is facing further investigations in other countries related to his fraud scheme.

Do Kwon

The judge stated that Kwon's scheme was a large-scale fraud that left numerous investors facing significant financial losses.

Court Ruling and Sentencing

Judge Paul A. Engelmayer imposed the 15-year prison sentence after prosecutors recommended a term of up to 12 years, while Kwon’s defense asked for a considerably shorter sentence. In August 2025, Kwon pleaded guilty to conspiracy to commit fraud and wire fraud, agreeing to forfeit approximately $19 million as part of the deal. The U.S. Attorney’s office revealed that his plea included an admission of misleading investors regarding how the stablecoin maintained its $1 peg.

Magnitude of the Financial Losses

Estimates indicate that the market fallout from the Terra collapse led to approximately $40 billion in lost value. Many ordinary investors have reported losing their life savings. During sentencing, some victims shared emotional accounts, detailing their financial devastation. News reports and court documents link the crash in May 2022 to a sudden loss of trust that rippled through the markets, negatively impacting other cryptocurrency firms.

Total crypto market cap current at $3.1 trillion. Chart: TradingView

Prior to the criminal case, Kwon and Terraform Labs were also embroiled in a significant civil action initiated by the U.S. Securities and Exchange Commission (SEC). The SEC reported that Terraform Labs and Kwon agreed to pay over $4.5 billion in disgorgement, interest, and penalties. Additionally, Kwon faced an $80 million civil fine and a prohibition from participating in crypto trading. This civil judgment, filed in 2024, has been part of regulatory efforts to compensate affected investors.

Kwon was taken into custody in Montenegro in March 2023 after fleeing Singapore; authorities reported that he was using forged travel documents at the time of his arrest. He contested his extradition in Montenegrin courts before eventually being sent to the U.S. in late 2024 to face federal charges. Reports describe a lengthy legal battle across multiple countries that culminated with his arrival in New York to face criminal charges.

Legal experts note that the 15-year sentence reflects the court’s recognition of the extensive damage caused by Kwon's fraudulent activities, serving as a warning to deter similar schemes. The statements made by victims during sentencing were likely an influential factor in the judge’s decision.

Kwon is still subject to separate investigations and potential charges in other nations, and the civil judgment indicates that significant amounts are designated for recovery efforts related to Terraform’s bankruptcy.

Featured image from Getty Images, chart from TradingView