Terra Founder Do Kwon Gets 15 Years for $40B Fraud

Key Notes

• Terraform Labs co-founder Do Kwon sentenced to 15 years in a US.
• prison for the $40 billion Terra/Luna collapse.
• The sentence from Judge Paul Engelmayer was longer than the 12 years prosecutors had recommended.
• Kwon pleaded guilty to fraud and conspiracy charges in August 2025.

Terraform Labs co-founder Do Kwon has been sentenced to 15 years in a U.S. prison for orchestrating the $40 billion collapse of the Terra/Luna stablecoin ecosystem. The sentence was delivered by U.S. District Judge Paul A. Engelmayer in Manhattan federal court.

The judgment exceeded the 12-year recommendation from prosecutors. Judge Engelmayer described the crime as a “fraud on an epic, generational scale,” and stated that 15 years was the minimum he could impose.

Kwon pleaded guilty to fraud and conspiracy charges in August 2025.

Market Reaction to the Sentence

Following the news, the remnant tokens of the Terra ecosystem

LUNA
$0.20



24h volatility:
4.2%


Market cap:
$142.17 M



Vol. 24h:
$394.96 M

reacted negatively. Terra Classic

LUNC
$0.000048



24h volatility:
12.0%


Market cap:
$266.59 M



Vol. 24h:
$164.59 M

is trading at $0.000047, a drop of nearly 20% in the last 24 hours. The newer Terra (LUNA) token fell over 10% to $0.17.

Kwon still faces a potential 40-year sentence in his native South Korea after completing his U.S. term.

His guilty plea stands in contrast to the not-guilty plea of FTX founder Sam Bankman-Fried, who received a 25-year sentence.

Implications for the Crypto Industry

Kwon’s 15-year sentence, while substantial, is lighter than the 25 years given to Sam Bankman-Fried. The key differentiator for trading desks and legal analysts is the guilty plea. Kwon’s admission of wrongdoing likely served as a significant mitigating factor, showing that cooperation can influence sentencing outcomes.

The sentence closes a major chapter of regulatory blowback from the 2022 market contagion. However, pending charges in South Korea mean that Kwon’s legal troubles are far from over.

For the broader industry, this case signals that international cooperation in prosecuting crypto-related fraud is becoming more streamlined and effective. Market participants and legal teams are likely to take note of how cross-border enforcement can impact high-profile cases.

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