Terraform Labs co-founder Do Kwon has received a 15-year prison sentence stemming from his involvement in the crypto fraud tied to the collapse of TerraUSD, which resulted in a $40 billion loss in 2022. The South Korean national pleaded guilty in August to conspiracy and wire fraud charges at Terraform Labs. US District Judge Paul A. Engelmayer handed down the sentence on Thursday at a hearing in Manhattan. Judge Dismisses 12-Year Jail Plea for Kwon, Calls it ‘Unreasonable’ Federal prosecutors already urged the court to impose the full 12 years permitted under Kwon’s plea agreement. Meanwhile, Kwon’s lawyers requested a 5-year sentence, so he can return to South Korea to face criminal charges. US prosecutors demand 12-year sentence for Do Kwon after Terra's $40B collapse that destabilized crypto markets and aided FTX implosion. #FTX #DoKwon #TerraForm https://t.co/LfzwEWH4XG — Cryptonews.com (@cryptonews) December 6, 2025 Per Inner City Press , which live-tweeted the proceedings of the lengthy hearing, Judge Engelmayer called the 12-year prison recommendation by US prosecutors “unreasonable.” He further said that a 5-year sentence “would be so implausible.” “15 years is the least I can impose,” the Judge said finally. “It is the judgment of the court that you are to serve a sentence of 15 years, with credit for time serviced in the US.” The Staggering $40B Crypto Debacle: Here’s What Happened Judge Engelmayer called the collapse an “epic” fraud. “This was a fraud on an epic, generational scale,” he said, per a BBC report . “In the history of federal prosecutions, there are few frauds that have caused as much harm as you have.” From 2018 to 2022, Kwon orchestrated schemes to defraud purchasers of cryptos created and issued by Terraform. The firm publicly announced the launch of its 1:1 USD-pegged stablecoin, TerraUSD (UST), and Luna coins. TerraUSD slipped below its $1 peg in May 2021, and Kwon made false statements about the stablecoin’s peg restoration mechanisms. He also concealed Jump Trading’s role in supporting the stablecoin during a 2021 depeg event. TerraUSD, which was designed to maintain a $1 peg, unraveled in May 2022, wiping out tens of billions in value, sparking a crypto sector-wide cascade of failures. “I made false and misleading statements about why it regained its peg by failing to disclose a trading firm’s role in restoring that peg,” Kwon admitted in August. “What I did was wrong.” The collapse led to criminal charges in the U.S. and South Korea, with both nations seeking Kwon’s extradition. In March 2023, Kwon was arrested in Montenegro for travelling with forged documents and was later extradited to the United States in December. The post Crypto Mogul Do Kwon Gets 15 Year Prison Term Over Terra’s $40B Collapse appeared first on Cryptonews .
