Do Kwon, the disgraced founder of Terraform Labs, has reportedly been sentenced to serve 15 years in prison for his alleged role in the spectacular collapse of the Luna tokens, a catastrophic incident that erased a massive $40 billion in capital back in 2022. Kwon received the sentencing on December 11, 2025 in the Southern District of New York (SDNY).
Notably, this has now exceeded the sentencing term that legal prosecutors had requested at an earlier date. The case prosecutors stated that Do Kwon must get 12 years in prison, highlighting the defendant’s alleged misconduct and the significant scope of the fraud. Meanwhile, Kwon’s legal team had recommended only 5 years of prison time.
U.S. District Judge Paul Engelmayer stated that Kwon intentionally chose to lie and made very poor decisions. This, according to an update from Inner City Press.
Kwon had been criminally charged back in March of 2023 with conspiracy to engage in fraudulent activities, commodities related fraud, wire fraud, securities fraud, conspiracy to carry out fraud, and taking part in a conspiracy to conduct market manipulation and money laundering.
Kwon had actually pleaded guilty in August to committing wire fraud and conspiracy to defraud unsuspecting investors.
The charges originate primarily from the demise of Terra USD, which is described as being an algorithmic stablecoin that reportedly makes use of market incentives through various algorithms in order to maintain a stable crypto token price.
As widely reported, Terra had been linked to Luna, which is a type of so-called “governance token,” using an unproven and ultimately ineffective stabilization mechanism.
Terra USD’s collapse sparked an unprecedented contagion problem that led to the downfall of a number of prominent crypto entities back in 2022.
Case prosecutors stated that Kwon had intentionally lied / misled people about the potential risks and so-called stability that had been associated with the digital tokens.
Now, without the plea deal, Kwon would have potentially faced a maximum sentence of 135 years in prison (had he been convicted on all outstanding charges).
But after wisely deciding to plead guilty to two of the main charges, Kwon had been facing a maximum 25-year term.
Earlier, the case prosecutors also recommended a $19 million forfeiture.
Legal representatives for the defendant had then argued that a prison term of up to 5 years would be adequate, claiming that the massive crash was attributed to various coordinated trades by different third-party companies that had been exploiting so-called vulnerabilities. They even tried to reference Chainalysis reports as part of their extensive arguments.
Kwon’s legal issues have now run their course globally.
He had been taken into police custody in Montenegro during March of 2024 for allegedly traveling with fake documents.
Back then, the United States and South Korea had announced warrants for his arrest. This had resulted in a fairly long argument between authorities about where he should actually be extradited to. In the end, Kwon had finally been extradited to the United States in December of last year.
Kwon could now face even more legal issues in South Korea.
He will now be required to serve at least half of his current prison sentence. After that, he may submit an application to be transferred to South Korea, and will get credit for the 17 months he had spent at a prison in Montenegro.
