US Sentencing
US District Judge Paul Engelmayer handed down a 15‑year prison sentence to Do Kwon, the co‑founder of Terraform Labs, for his role in the $40 billion collapse of TerraUSD. The judge rejected both the prosecution’s recommendation of 12 years and the defense’s request for 5 years, stating that the severity of the fraud justified the lengthy term.
Potential South Korean Trial
South Korean prosecutors are seeking a sentence of more than 30 years for violations of capital‑markets laws. Kwon could apply to be transferred to South Korea after serving half of his US sentence, where he would face another trial on those charges.
Background of the TerraUSD Collapse
The collapse of TerraUSD and its sister token, Luna, unfolded between 2018 and 2022. Kwon admitted to knowingly participating in schemes that defrauded investors. The tokens were marketed as maintaining a one‑to‑one dollar peg through their protocol design, but that promise proved false. When Terra fell below $1 in May 2021, Kwon publicly claimed the protocol had autonomously restored its value. Prosecutors later revealed that an investment firm had secretly purchased Terra to prop up its price artificially.
Wider Crypto‑Related Criminal Activity
Kwon’s sentencing arrives amid a global rise in crypto‑related criminal activity, underscoring heightened regulatory scrutiny and the increasing seriousness with which authorities are pursuing digital‑asset fraud cases.
