U.S. prosecutors seek 12-year sentence for Do-hyung over “colossal” TerraUSD fraud
Do-hyung is now facing a possible 12-year prison sentence in the United States after federal prosecutors called the TerraUSD disaster a “colossal fraud” in a Thursday court filing.
The U.S. government told Judge Paul Engelmayer in New York that the crime was massive enough to wreck entire corners of the crypto industry, from retail investors to exchanges like FTX, which crumbled shortly after.
The sentencing is locked in for December 11, where Judge Engelmayer will decide the fate of the Terraform Labs co-founder. The prosecutors want a harsh sentence because, as they told the court, Do-hyung lied to users and triggered a chain reaction that led to the infamous $40 billion wipeout.
Kwon offered 5 years, feds want 12
Do-hyung tried to cut his punishment short. In a separate filing last week, he said five years would be enough. He had already pleaded guilty in August to both conspiracy and wire fraud, with a deal that capped the sentence at no more than 12 years.
That deal also forced him to hand over $19.3 million and some of his properties. The government made it clear they are not pursuing restitution, saying it would be too messy to figure out the exact losses for the millions of people who lost money.
His legal issues haven’t been limited to the U.S. After he was caught using a fake passport in Montenegro in 2023, authorities from South Korea and the U.S. fought over who would get him first.
He ended up being extradited to the U.S. in January, after spending nearly two years locked up in Montenegro over the passport charges.
Even with all that, U.S. officials say they’ll support transferring him to South Korea for the second half of his sentence, but only if he keeps his end of the plea deal and qualifies under an international inmate transfer program.
The case is landing at a strange moment for crypto enforcement. While Do-hyung’s sentence is being pushed hard by prosecutors, the broader crackdown seems to be losing steam.
Just this October, Donald Trump pardoned Changpeng Zhao, the Binance founder, who was convicted of running the world’s largest crypto exchange without proper anti-money-laundering controls.
The difference in how these two cases are being handled hasn’t gone unnoticed in the crypto world. While Zhao walked, Do-hyung might get locked up for over a decade if the government gets its way.
And with billions lost, no restitution planned, and no clear fix for the victims, the court’s decision next week is likely to set the tone for how hard the U.S. plans to come down on failed crypto founders.
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US Prosecutors Seek 12-Year Prison for Do Kwon Over Terra Collapse
Highlights: US prosecutors requested a 12-year prison sentence for Do Kwon after the Terra collapse. Terraform’s $40 billion downfall caused huge losses and sparked a long downturn in crypto markets. Do Kwon will face sentencing on December 11 and must give up $19 million in earnings. US prosecutors have asked a judge to give Do Kwon, Terraform Labs co-founder, a 12-year prison sentence for his role in the remarkable $40 billion collapse of the Terra and Luna tokens. The request also seeks to finalize taking away Kwon’s criminal earnings. The court filing came in New York’s Southern District on Thursday. This is about four months after Kwon admitted guilt on two charges: wire fraud and conspiracy to defraud. Prosecutors said Kwon caused more losses than Samuel Bankman-Fried, Alexander Mashinsky, and Karl Sebastian Greenwood combined. U.S. prosecutors have asked a New York federal judge to sentence Terraform Labs co-founder Do Kwon to 12 years in prison, calling his role in the 2022 TerraUSD collapse a “colossal” fraud that triggered broader crypto-market failures, including the downfall of FTX. Sentencing is… — Wu Blockchain (@WuBlockchain) December 5, 2025 Terraform Collapse Shakes Crypto Market Authorities explained that Terraform’s collapse affected the entire crypto market. They said it helped trigger what is now called the ‘Crypto Winter.’ The filing stressed that Kwon’s conduct harmed many investors and the broader crypto world. On Thursday, prosecutors said Kwon must give up just over $19 million. They added that they will not ask for any additional restitution. They said: “The cost and time associated with calculating each investor-victim’s loss, determining whether the victim has already been compensated through the pending bankruptcy, and then paying out a percentage of the victim’s losses, will delay payment and diminish the amount of money ultimately paid to victims.” Authorities will sentence Do Kwon on December 11. They charged him in March 2023 with multiple crimes, including securities fraud, market manipulation, money laundering, and wire fraud. All connections are tied to his role at Terraform. After Terra fell in 2022, authorities lost track of Kwon until they arrested him in Montenegro on unrelated charges and sent him to the U.S. Do Kwon’s Legal Case and Sentencing In April last year, a jury ruled that both Terraform and Kwon committed civil fraud. They found the company and its co-founder misled investors about how the business operated and its finances. Jay Clayton, U.S. Attorney for the Southern District of New York, submitted the sentencing request in November. TERRA STATEMENT: “We are very disappointed with the verdict, which we do not believe is supported by the evidence. We continue to maintain that the SEC does not have the legal authority to bring this case at all, and we are carefully weighing our options and next steps.” — Zack Guzmán (@zGuz) April 5, 2024 The news of Kwon’s sentencing caused Terraform’s token, LUNA, to jump over 40% in one day, from $0.07 to $0.10. Still, this rise remains small compared to its all-time high of more than $19, which the ecosystem reached before collapsing in May 2022. In a November court filing, Do Kwon’s lawyers asked for a maximum five-year sentence. They argued for a shorter term partly because he could face up to 40 years in prison in South Korea, where prosecutors are also pursuing a case against him. The legal team added that even if Kwon serves time in the U.S., he would not be released freely. He would be moved from prison to an immigration detention center and then sent to Seoul to face pretrial detention for his South Korea charges. eToro Platform Best Crypto Exchange Over 90 top cryptos to trade Regulated by top-tier entities User-friendly trading app 30+ million users 9.9 Visit eToro eToro is a multi-asset investment platform. The value of your investments may go up or down. Your capital is at risk. Don’t invest unless you’re prepared to lose all the money you invest. This is a high-risk investment, and you should not expect to be protected if something goes wrong.
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