Do Kwon, co-founder of Terraform Labs, received 15 years in prison after pleading guilty to fraud linked to TerraUSD’s $40 billion collapse, underscoring severe investor losses and regulatory repercussions.
Do Kwon, South Korean co-founder of Terraform Labs, was sentenced on December 11, 2025 to 15 years in federal prison after pleading guilty to conspiracy to defraud and wire fraud in connection with the collapse of TerraUSD and its sister token Luna. The Manhattan court ruling followed testimony from victims describing financial ruin. Prosecutors noted Kwon misled investors about TerraUSD’s stability mechanisms, with market fallout erasing around $40 billion. He agreed to forfeit $19 million. The SEC previously secured a $4.5 billion settlement from Terraform Labs and Kwon, including $80 million in personal fines and a trading ban. Arrested in Montenegro in March 2023 for using forged documents, Kwon was extradited to the U.S. in late 2024. Legal experts say the sentencing aims to deter similar large-scale fraud.