Terraform Labs co-founder Do Kwon was sentenced to 15 years in prison in New York for the multibillion-dollar fraud that fueled the 2022 collapse of his crypto empire and contributed to broader turmoil across digital-asset markets.
Summary
- Kwon received a 15-year prison term in New York for the multibillion-dollar fraud that led to the 2022 collapse of TerraUSD.
- Kwon still faces prosecution in South Korea after completing his U.S. sentence.
- Prosecutors highlighted Kwon’s role in the 2022 “crypto winter” and the collapse of FTX, Celsius, and OneCoin.
U.S. District Judge Paul Engelmayer called Kwon’s actions “a fraud of epic generational scale,” imposing a longer sentence than the 12 years prosecutors sought and emphasizing the unprecedented financial harm inflicted on investors.
Kwon, 34, had been a fugitive for months before being arrested in Montenegro in 2023 for using a fake passport. The U.S. fought a lengthy battle to extradite him to face charges, while he simultaneously faced prosecution in South Korea, where he is still expected to stand trial after completing his US sentence.
The sentencing comes at a moment when the Trump administration has dialed back certain crypto-market enforcement efforts, including President Trump’s October pardon of Binance founder Changpeng Zhao. Prosecutors argued that Kwon’s deception accelerated the 2022 “crypto winter” and contributed to the collapse of Sam Bankman-Fried’s FTX, as well as losses tied to Celsius CEO Alex Mashinsky and OneCoin promoter Karl Sebastian Greenwood. Combined, prosecutors said, their losses were still smaller than those attributed to Kwon alone.
At the hearing, Kwon apologized to victims and admitted he should be held responsible. His lawyers sought a sentence of no more than five years, claiming his intent was to stabilize TerraUSD rather than deceive investors.
The judge rejected this as “wildly unreasonable,” according to Bloomberg News.
Kwon previously pleaded guilty to conspiracy and wire fraud, agreeing to forfeit $19.3 million and several properties. Prosecutors told the court they would support allowing Kwon to serve the second half of his sentence in South Korea if he complies with the plea deal. They declined to pursue restitution for the estimated $40 billion in investor losses, citing the near-impossible complexity of calculating claims.
Terraform Labs, founded by Kwon and Daniel Shin in 2017, collapsed after TerraUSD lost its dollar peg in May 2022, triggering a chain reaction of market failures. Kwon was later detained in Montenegro for nearly two years before extradition proceedings concluded.
In 2024, a U.S. civil jury also found both Kwon and Terraform liable for securities fraud related to misrepresentations about TerraUSD’s stability and its alleged use by the Korean payments app Chai.
Kwon still faces additional legal jeopardy in South Korea once his U.S. sentence is complete.
