South Korean entrepreneur, Do Kwon, behind the collapse of two cryptocurrencies that wiped out $40bn (£29.8bn) in value, has been sentenced to 15 years in prison for fraud.
The 34-year-old pleaded guilty to conspiracy to defraud and wire fraud charges in the United States. He co-founded Singapore-based Terraform Labs and developed the TerraUSD and Luna tokens, whose implosion in 2022 triggered a wider crash in the sector.
At a hearing in New York, US district judge Paul Engelmayer described Kwon’s crimes as “a fraud of epic generational scale”. He imposed a sentence longer than the 12 years sought by prosecutors, saying that would be too lenient given the devastation caused. “In the history of federal prosecutions very few cases have caused more monetary harm than you did,” the judge said.
Prosecutors argued that Kwon’s actions contributed to the “crypto winter” of 2022 and the collapse of Sam Bankman-Fried’s FTX exchange. Kwon admitted responsibility, telling the court: “The blame should be pointed at me for everyone’s suffering. I have spent almost every waking moment of the last few years thinking of what I could have done different and what I can do now to make things right.”
His lawyers had asked for a sentence of no more than five years, claiming his motive was to support Terraform’s stablecoin rather than personal gain. The judge dismissed the request as “wildly unreasonable”.
Kwon has been in US custody since his extradition from Montenegro last year, where he was jailed for travelling on a false passport. As part of his plea deal, he agreed to forfeit $19.3m and properties linked to the fraud. Prosecutors said they would support him serving the latter half of his sentence in South Korea, where he still faces charges, if he complies with the agreement.
The court received letters from 315 victims worldwide, many describing losses of homes, retirement savings, medical funds and college tuition. Judge Engelmayer said some investors continued to support Kwon even after his guilty plea, likening their words to those of “cult followers”.
A graduate of Stanford University, Kwon launched Terraform Labs in 2017 with co-founder Daniel Shin. Prosecutors said that when TerraUSD slipped below its $1 peg in May 2021, Kwon falsely claimed an algorithm called “Terra Protocol” had restored its value. In reality, a trading firm secretly bought millions of dollars’ worth of tokens to prop up the price.
That deception, prosecutors said, encouraged investors to buy Terraform products and drove the value of Luna to $50bn by spring 2022. The collapse of both tokens marked one of the most damaging episodes in cryptocurrency history. Bankman-Fried, founder of FTX, was sentenced to 25 years in prison in 2024.
Kwon joins other high-profile figures facing lengthy sentences after the sector’s downturn.
