Do Kwon Sentenced to 15 Years in U.S. Terraform Fraud Case
Do Kwon, co-founder of Terraform Labs, was sentenced to 15 years in prison after pleading guilty to wire fraud and conspiracy to defraud. At a Thursday hearing in the US District Court for the Southern District of New York, Judge Paul Engelmayer imposed the term for Kwon’s role in Terraform’s collapse, which erased about $40 billion from the cryptocurrency market in 2022. Kwon will receive credit for time served in the United States and 17 months spent in custody before extradition.
Before issuing the sentence, Judge Engelmayer heard statements from Terraform investors and questioned what justice Kwon might face in South Korea, where authorities are also pursuing a case. “I would like everyone to know that I have spent all my time thinking what I could have done, and what I can do,” Kwon said prior to sentencing, according to Inner City Press. “It’s been four years since the crash, three years since I’ve seen my family. I’d like to [do] my penance in my home country.”
Judge Engelmayer said the 12-year prison term proposed by US prosecutors was “unreasonable,” while the five-year term requested by Kwon’s attorneys “would be so implausible it would require appellate reversal,” Inner City Press reported. “To the next Do Kwon, if you commit fraud, you will lose your liberty for a long time as you will here,” he said. “You have been bitten by the crypto bug, and I don’t think that’s changed. You must be incapacitated. If not for your guilty plea, my sentence would have been higher.”
Addressing Kwon, the judge added: “Your fraud was unusually serious. For four years you publicly lied to the market […] The investors were taking a risk, caveat emptor. But they were not taking the risk of being a fraud victim… What makes what you did so despicable is that you traded on trust.”
Kwon could be transferred to South Korea after serving seven and a half years, where he may serve the remainder of his US sentence. He could also face up to an additional 40 years in prison in South Korea.
Victim statements presented at the sentencing hearing
Prosecutors said approximately 16,500 people were affected by Terraform’s collapse, based on claims in the company’s ongoing bankruptcy proceedings. Six victims addressed the court by phone before the sentence was imposed, detailing their losses connected to Terra.
“I sold my apartment in Moscow to invest with Do Kwon,” said Tatiana Dontsova, according to Inner City Press. “I moved to Tbilisi. $81,000 turned into $13 in the palm of my hand. Kwon came up with Luna 2, calling it LUNC. He is not showing any responsibility for those who invested. I am now officially homeless.”
Kwon, alleged to have played a central role in Terra’s 2022 collapse, was transferred to US custody in December 2024 following extradition from Montenegro. His legal team had delayed proceedings for months through challenges in Montenegrin courts.
With the sentence, Kwon becomes the latest high-profile crypto executive to plead guilty or be convicted in US cases. Former FTX CEO Sam Bankman-Fried is serving a 25-year sentence, former Binance CEO Changpeng Zhao served four months — later pardoned by US President Donald Trump — and former Celsius CEO Alex Mashinsky received 12 years.
Stay informed, read the latest news right now!
Disclaimer
The content on TrustsCrypto.com is for informational purposes only and does not constitute financial or investment advice. Cryptocurrency markets are highly volatile, always do your own research before making decisions.
Some content may be assisted by AI and reviewed by our editorial team, but accuracy is not guaranteed. TrustsCrypto.com is not responsible for any losses resulting from the use of information provided.
