Terra Founder Do Kwon Gets 15-Year Prison Term for Crypto Fraud

A New York federal judge sentenced Terraform Labs co-founder Do Kwon to 15 years in prison Thursday for orchestrating fraud schemes that devastated crypto investors worldwide, the Financial Times reported on Friday.

Judge Paul Engelmayer delivered a term three years longer than what federal prosecutors requested, citing the massive scope of harm caused when Terra's algorithmic stablecoin and luna token imploded in May 2022, the report said.

The 34-year-old South Korean national admitted guilt to two fraud counts in August, acknowledging he deliberately misled investors who purchased crypto assets from his company. Court proceedings revealed Kwon maintained significant influence over his investor base even after the collapse, with supporters applauding as he entered the courtroom in prison attire.

During the sentencing hearing, Kwon offered an apology and said he hoped other cryptocurrency founders would learn from his downfall. He showed emotion while addressing former colleagues who attended the proceedings, according to the FT report.

Federal prosecutors built their case around Kwon's concealment of a May 2021 crisis at Terra, which he covered up with assistance from external trading operations. Evidence showed he was publicly attacking critics on social media just hours before Terra's catastrophic failure.

The collapse eliminated over $40 billion in value and set off a domino effect throughout digital asset markets. The fallout contributed to FTX's subsequent implosion and triggered an industry downturn that persisted through early 2023.

Testimony from victims painted a devastating picture. One woman in her late fifties told the court she lost nearly all of her $81,000 investment in Luna tokens, leaving her homeless in Georgia. Prosecutors noted that financial losses drove some victims to suicide and destroyed families.

Kwon's journey to the courtroom involved fleeing multiple jurisdictions after South Korea filed criminal charges in September 2022. He moved from Singapore to Serbia before reaching Montenegro, where authorities arrested him while attempting to travel on fraudulent documents. U.S. authorities secured his extradition in December 2024 after he spent nearly two years in isolation.