- The court gave Do Kwon a 15 year sentence for his role in the Terraform collapse that caused major investor losses.
- Victim accounts influenced the judge who viewed Kwon’s actions as serious and harmful to thousands of investors.
- Kwon may face more prison time in South Korea after serving part of his sentence in the United States.
In New York, a federal judge imposed 15 years of imprisonment on Terraform Labs co-founder Do Kwon for his part in the collapse of the Terra ecosystem. The decision was made after both parties took a long time in victim statements and lengthy submissions.
The prison term exceeded the recommendation from prosecutors and marked another major conviction within the cryptocurrency sector. The court credited Kwon for time served in the United States and the 17 months he spent in custody before extradition.
Victim Accounts Shape the Court’s View
Several people who testified during the sentencing hearing said they suffered severe financial losses following the implosion of TerraUSD and Luna in 2022. Their statements described heavy personal consequences. The company’s bankruptcy filings listed about 16,500 affected investors. The judge reviewed these accounts while weighing Kwon’s plea and the extent of his misconduct. The court examined the scale of the market impact, which involved roughly $40 billion in losses. Earlier, Do Kwon pleaded not guilty over fraud charges in the US for the $40 billion TerraUSD collapse in 2022.
The judge also considered how long Kwon had continued to make public assurances about Terra’s stability. The court assessed these actions as part of a pattern that misled investors and fueled the project’s rapid expansion. The judge viewed the conduct as unusually serious and noted that investors accepted market risks but did not expect hidden manipulation.
Legal Arguments and the Final Decision
Prosecutors demanded a 12-year sentence and highlighted the magnitude of the fraud and previous conduct of Kwon around the project. Kwon wanted a five-year sentence, which was presented by his legal team. They stated that external trading activity exploited weaknesses in the system and accelerated the collapse. They referenced academic research and blockchain analysis to support their position. However, the judge rejected both proposals and identified a middle ground.
Kwon had pleaded guilty in August to wire fraud and conspiracy to defraud. The plea deal reduced his exposure from a potential 135-year maximum to a 25-year maximum. Prosecutors had also sought a $19 million forfeiture. The sentencing decision reflected the judge’s view that Kwon knowingly misled the market and continued these actions over several years.
International Dimension and Potential Future Proceedings
In March 2024, authorities arrested Kwon in Montenegro on forged travel document charges. Both South Korea and the United States wanted extradition. A series of appeals extended the process until his transfer to the United States in December 2024. He now faces possible additional proceedings in South Korea. He may apply for a transfer after serving at least half of his U.S. sentence. South Korean authorities have prepared a separate case that could add up to 40 years of prison time.
Kwon’s conviction places him among several former crypto executives who now face significant penalties, including leaders from FTX, Binance, and Celsius.
