Terraform Labs co-founder Do Kwon has been sentenced to fifteen years in federal prison for orchestrating a massive fraud that led to the catastrophic collapse of the TerraUSD (UST) and Luna cryptocurrencies.
The sentence, handed down in Manhattan federal court, follows his guilty plea to charges stemming from a scheme that prosecutors and the judge described as unprecedented in its scale and human cost. Judge Paul A. Engelmayer emphatically rejected both the defense’s request for a five-year term and the prosecution’s recommendation of twelve years, declaring the latter “unreasonably lenient” for a crime of such magnitude.
During an emotional sentencing hearing, victims provided harrowing testimony detailing the profound personal wreckage caused by the $40 billion market collapse. One individual addressed the court directly, while others called in, describing lost life savings, decimated charitable funds, and shattered financial security.
The judge referenced a victim’s letter stating they had contemplated suicide after a parent lost their retirement, underscoring the profound human toll beyond the staggering financial figure. Judge Engelmayer told Kwon, who appeared in a yellow jail suit, that his actions “caused real people to lose $40 billion in real money” and cited the “almost mystical hold” he held over investors.
The court formally recognized the Terra-Luna failure as one of the largest financial frauds in history, explicitly noting that the investor losses surpassed those from the contemporaneous downfalls of FTX and OneCoin.
Judge Engelmayer characterized Kwon’s conduct at Terraform Labs as an “epic fraud on a generational scale,” a deliberate scheme that led to incalculable damage for an estimated one million victims worldwide. While the disgraced crypto mogul, once hailed as a “cryptocurrency king,” offered an apology to the court, the judge’s substantial sentence marks a pivotal moment of accountability in the ongoing reckoning for the digital asset industry. This ruling sets a formidable precedent for the legal consequences facing cryptocurrency founders who mislead investors and manipulate markets.
