A U.S. federal court on Thursday sentenced South Korean cryptocurrency entrepreneur Do Kwon to 15 years in prison for his role in the collapse of two digital currencies that wiped out an estimated $40 billion in 2022 — a disaster the judge described as a “legendary fraud.”
Kwon, 34, co-founder of Singapore-based Terraform Labs and developer of the TerraUSD and Luna cryptocurrencies, had earlier pleaded guilty to misleading investors about TerraUSD, a so-called stablecoin that was marketed as maintaining a one-dollar value even during market volatility.
The court heard that when TerraUSD slipped below its dollar peg in May 2021, Kwon falsely told investors that the coin’s “Terra Protocol” algorithm had automatically restored stability.
In reality, prosecutors said, he had secretly arranged with a high-frequency trading firm to purchase tens of millions of dollars’ worth of tokens to artificially support the price.
During the hearing, Kwon — dressed in a yellow prison uniform — apologized to the victims, hundreds of whom wrote letters describing their losses. “Their stories were horrific and reminded me of the immense damage I caused,” he told the court. “I want to tell them that I am sorry.”
Kwon pleaded guilty last August to conspiracy to commit fraud and wire fraud. His conviction is one of several high-profile cases brought against major cryptocurrency figures following the sector’s 2022 meltdown, which led to multiple corporate collapses.
In 2024, Kwon and Terraform Labs agreed to a $4.55 billion settlement with the U.S. Securities and Exchange Commission, including an $80 million personal civil penalty and a ban on Kwon trading cryptocurrencies.
He also faces separate charges in South Korea.
Under the plea agreement, U.S. prosecutors will not oppose Kwon’s request to be transferred abroad once he has served half of his sentence in the United States.
