TerraUSD Founder Do Kwon Sentenced to 15 Years in Prison for Crypto Scandal

Do Kwon has become a symbol of the collapse of the era of "blind trust" in the crypto market. (photo: x @jeg6322)

JAKARTA - Do Kwon, a South Korean crypto entrepreneur behind the collapse of the TerraUSD and Luna ecosystems, has been sentenced to 15 years in prison by a US federal court. The judge called the case an "epic fraud" that caused losses across generations, with the market's destruction value estimated at $40 billion (Rp665.3 trillion) in 2022.

US District Judge Paul A. Engelmayer, who read the verdict in Manhattan court, harshly reprimanded Kwon for repeatedly lying to retail investors who entrusted their life savings to him. In the trial, Engelmayer stated that there was hardly any other federal fraud case that caused as much damage as Kwon.

Do Kwon, now 34, is the co-founder of Singapore-based Terraform Labs and creator of the stablecoin TerraUSD (UST) and the Luna token. He previously pleaded guilty and admitted to misleading investors regarding the coin's claimed stable mechanism amid crypto market volatility.

In his statement before the judge, Kwon - wearing a prison uniform - apologized to the victims. Hundreds of investors sent letters to the court, telling of the huge losses they had suffered. One of them, Ayyildiz Attila, admitted to losing savings between 400,000 and 500,000 US dollars, which he said wiped out his future and years of hard work.

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Prosecutors said Kwon devised a complex scheme to inflate the value of his crypto assets, then avoided responsibility when the system collapsed. They are seeking a minimum sentence of 12 years, judging that Terra's collapse was the trigger for a domino effect that shook the global crypto industry in 2022.

Kwon's lawyer had asked for a maximum sentence of five years so that his client could return to South Korea immediately to face charges in his home country. However, the court chose to impose a much heavier sentence.

Kwon is accused of various offenses, including securities fraud, fraud through electronic networks, commodity fraud, and money laundering conspiracy. Prosecutors believe Kwon misled investors by claiming the Terra Protocol's algorithm was able to return the TerraUSD value benchmark to 1 US dollar, although the stability was achieved through secret purchases by high-frequency trading companies.

In August 2025, Kwon pleaded guilty to two charges, namely conspiracy to commit fraud and wire fraud. He has also agreed to pay a civil fine of 80 million US dollars and is prohibited from engaging in crypto transactions, as part of a settlement worth 4.55 billion US dollars with the US Securities and Exchange Commission (SEC).

In addition to the sentence in the US, Kwon is still facing legal proceedings in South Korea. Based on an agreement with prosecutors, the US government will not oppose Kwon's request to be transferred abroad after serving at least half of his sentence.

Do Kwon's case is a symbol of the collapse of the era of "blind trust" in the crypto market. The message is simple but bitter: algorithms can be sophisticated, promises can go viral, but the law remains analog and long-winded.