Do Kwon Gets 15 Years as Judge Calls Terra Fraud “Despicable”

TLDR

• Do Kwon, Terraform Labs co-founder, was sentenced to 15 years in prison for wire fraud and conspiracy after pleading guilty in August 2025.
• The collapse of Terra in May 2022 wiped out between $40-50 billion from the crypto market over three days.
• Judge Paul Engelmayer rejected both the prosecution’s 12-year recommendation and defense’s 5-year request as too lenient.
• Kwon can apply for transfer to South Korea after serving half his sentence, where he faces additional charges that could add up to 40 years.
• Six victims testified at the hearing, with approximately 16,500 total victims documented in Terraform’s bankruptcy case.

Do Kwon received a 15-year prison sentence on Wednesday for his role in the collapse of Terraform Labs. The co-founder pleaded guilty to wire fraud and conspiracy charges in August 2025.

Judge Paul Engelmayer of the US District Court for the Southern District of New York handed down the sentence after hearing testimony from victims. The collapse of Terra in May 2022 eliminated between $40 billion and $50 billion from the crypto market in just three days.

The sentence exceeded prosecutors’ recommendation of 12 years. Kwon’s legal team had requested five years, which the judge called “utterly unthinkable and wildly unreasonable.”

About 16,500 victims filed claims in Terraform’s bankruptcy case. Six victims spoke at the sentencing hearing, describing their financial losses.

Tatiana Dontsova testified she sold her Moscow apartment to invest with Kwon. Her $81,000 investment dropped to $13 after the collapse. She stated she is now homeless.

The Judge’s Reasoning

Judge Engelmayer called Kwon’s fraud “unusually serious” during the hearing. He noted Kwon publicly lied to the market for four years while privately exiting his positions during Terra’s final collapse.

The judge questioned whether there was political influence in the plea agreement. Both prosecutors and defense attorneys denied any outside involvement beyond the Southern District of New York.

Extradition and Future Charges

Kwon was extradited to the US from Montenegro in December 2024. He fled to Serbia and then Montenegro on false passports before authorities caught him traveling to Dubai.

He will receive credit for time served in the US and 17 months of pre-extradition custody. Kwon can apply for transfer to South Korea after serving seven and a half years.

South Korean authorities are building a separate case against him. He could face up to 40 years in additional prison time in his home country.

Kwon’s original indictment included nine counts with a maximum sentence of 135 years. Prosecutors reduced this to two counts in exchange for his guilty plea.

Jay Clayton, who runs the DOJ’s Southern District of New York branch, stated that Kwon “devised elaborate schemes to mislead investors and inflate the value of Terraform’s cryptocurrencies for his own benefit.”

Kwon admitted during his August plea hearing that he “knowingly engaged in a scheme to defraud” purchasers of the TerraUSD stablecoin. The 33-year-old South Korean national is now the latest crypto executive to face prison time in US courts.

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