A U.S. federal judge has sentenced cryptocurrency entrepreneur Do Kwon to 15 years in prison, calling his conduct an “epic” fraud that contributed to the collapse of digital assets worth an estimated $40 billion and caused widespread investor losses.
Do Kwon, the South Korean cryptocurrency entrepreneur behind the TerraUSD and Luna digital currencies, has been sentenced to 15 years in prison in the United States following his role in what a federal judge described as an “epic” and generational fraud.
The sentence was imposed in Manhattan federal court, where U.S. District Judge Paul A. Engelmayer sharply criticized Kwon for repeatedly misleading investors who trusted him with their life savings. The judge said the scale of the harm caused by the collapse of Kwon’s cryptocurrency projects ranked among the most damaging frauds prosecuted in U.S. federal court.
Kwon co-founded Singapore-based Terraform Labs and developed TerraUSD, a so-called stablecoin that was marketed as maintaining a stable value during periods of market volatility. In 2022, TerraUSD and its sister token Luna collapsed, wiping out an estimated $40 billion in market value and triggering broader turmoil across the global cryptocurrency market.
Court records show that Kwon misled investors about how TerraUSD regained its price stability after briefly losing its peg in 2021. Prosecutors alleged that Kwon falsely claimed a computer algorithm restored the coin’s value, while secretly arranging for a high-frequency trading firm to purchase large amounts of the token to artificially support its price.
Kwon pleaded guilty in August to conspiracy to defraud and wire fraud. During sentencing, he apologized to victims, including hundreds of investors who submitted statements describing severe financial hardship. Some victims reported losing their life savings and struggling to meet basic financial obligations following the collapse.
Prosecutors had sought a sentence of at least 12 years, citing the magnitude of investor losses and the cascading impact on the cryptocurrency industry. Kwon’s lawyers had argued for a shorter sentence so he could return to South Korea, where he also faces criminal charges.
In addition to his prison sentence, Kwon previously agreed to pay a significant civil penalty and accept a ban from cryptocurrency transactions as part of a settlement with U.S. regulators. He is expected to face further legal proceedings in South Korea after serving part of his U.S. sentence.
