^{Photo: The Korea Herald}

Do Kwon, the 34 year old co founder of Terraform Labs and the architect behind the failed TerraUSD and Luna cryptocurrencies, has been sentenced to 15 years in federal prison. The ruling follows what prosecutors and the court described as one of the most consequential financial deceptions ever seen in the digital asset sector. The collapse of the two tokens in 2022 wiped out an estimated 40 billion dollars in value and triggered widespread instability across the broader crypto ecosystem.

The sentence was delivered by U.S. District Judge Paul A. Engelmayer in Manhattan, who sharply criticized Kwon for systematically misleading investors. The judge stated that the scale of the wrongdoing ranks among the most destructive in federal fraud cases, noting that individual investors lost life savings, retirement portfolios and years of financial security. Prosecutors highlighted that the downturn of TerraUSD set off additional failures across the industry, exacerbating a crypto market downturn that erased trillions of dollars in global value.

During the hearing, Kwon appeared in yellow prison clothing and addressed the court directly. He apologized to the hundreds of victims who had submitted written statements detailing the financial and emotional toll of the collapse. Many retail investors reported losing everything. One victim, Ayyildiz Attila, said he lost up to 500,000 dollars, describing the financial fallout as devastating and life altering.

Kwon pleaded guilty earlier to conspiracy to defraud and wire fraud. Prosecutors said he misled investors about the stability of TerraUSD, a stablecoin marketed as reliably pegged to one dollar. When the coin began to slip below its peg in 2021, Kwon publicly claimed that the Terra Protocol algorithm had restored stability. In reality, charging documents revealed he arranged for a high frequency trading firm to purchase large quantities of the token behind the scenes to artificially raise the price.

The U.S. government charged Kwon with nine criminal counts in total, including securities fraud, wire fraud, commodities fraud and money laundering conspiracy. Prosecutors sought a minimum of 12 years in prison, while Kwon’s legal team argued for a sentence of no more than five years, citing his intent to return to South Korea to face additional charges. After sentencing, Kwon’s attorney said his client expressed sincere remorse and intends to continue cooperating with authorities.

The fallout from the Terra collapse led to extensive regulatory and legal action. In 2024, Kwon and Terraform Labs agreed to pay 80 million dollars in civil penalties as part of a 4.55 billion dollar settlement with the Securities and Exchange Commission. Kwon was also banned from participating in cryptocurrency transactions. Alongside the U.S. charges, he faces parallel criminal proceedings in South Korea, where authorities have pursued him since the collapse.

As part of his plea agreement, U.S. prosecutors will not oppose a request for Kwon to be transferred abroad after serving half of his sentence. The ruling marks one of the most significant enforcement actions in the history of cryptocurrency and underscores the intensifying global scrutiny surrounding stablecoins, token issuers and the accountability of digital asset founders.