Catenaa, Friday, December 12, 2025- Terraform Labs founder Do Kwon was sentenced to 15 years in prison in New York for his role in the 2022 collapse of TerraUSD and Luna, an event that erased about $40 billion in market value and sent shock waves across the crypto sector.
The judgment followed a federal case that detailed a pattern of deception tied to the design and promotion of TerraUSD. Prosecutors said the token’s structure masked major risks.
They argued that Kwon caused broad harm through false assurances about stability and market behavior. His defense team sought a lighter sentence, claiming outside actors exploited flaws in the system.
Kwon had pleaded guilty in August to wire fraud and conspiracy to defraud. The plea reduced his exposure from a possible 135-year maximum on nine original charges. He still faced a potential 25-year term under the agreement.
Prosecutors also requested a financial penalty tied to earlier gains.
TerraUSD failed after its stabilization link to Luna broke apart in May 2022. The token’s algorithmic structure could not hold its price as selling pressure surged. The collapse set off a chain reaction that dragged several crypto firms into bankruptcy.
Kwon’s case stretched across several jurisdictions. He was detained in Montenegro in March 2024 for using false travel documents. Both the United States and South Korea sought extradition. He was handed to US authorities in December 2024.
He may face further action in South Korea once he completes part of his sentence.
