Terraform's Do Kwon Sentenced to 15 Years in Prison for Fraud

NEW YORK — Terraform Labs co-founder Do Kwon was sentenced to 15 years in prison on Wednesday for his role in a massive fraud that saw roughly $50 billion wiped from the crypto ecosystem over the course of just three days in May 2022.

The sentence, handed down by District Judge Paul Engelmeyer of the Southern District of New York (SDNY), is slightly more than the 12-year sentence requested by prosecutors and much greater than the five-year sentence suggested by Kwon’s lawyers. Kwon must serve at least half of this sentence before he can apply for a transfer to South Korea, where he faces further charges.

The judge's sentence followed a lengthy hearing, with victims testifying both in-person and via phone about how Terra's collapse affected them or their families.

Read more: Do Kwon’s Sentencing Hearing Drags on as Court Weighs Mountain of Victim Testimony

Engelmeyer said that he took under consideration the “eye-popping” magnitude of Kwon’s fraud, in terms of both the money lost and the sheer number of victims, as well as the fact that he attempted to run from the law, fleeing at first to Serbia, then Montenegro, on false passports before getting caught en route to Dubai. In an hour-long speech, the judge detailed Kwon’s numerous lies, and called his conduct — particuarly during UST’s final de-peg, during which he publicly advised retail investors to stay invested while he and others close to the project privately began to exit their positions — “despicable.”

Kwon’s notoriously trollish social media presence appeared to be particularly galling to Engelmeyer, who brought up a Twitter post in which Kwon derisively told a critic: “I don't debate the poor on Twitter, and sorry I don't have any change on me for her at the moment.”

Quoting historian Robert Caro, Engelmeyer said: “The thing about power is that it reveals … You belittled a well-founded skeptic. I found that moment revealing about who you truly are.”

The defense’s requested sentence of five years, the judge said, was “utterly unthinkable and wildly unreasonable,” adding that it was “so implausible that, if imposed, it would require appellate reversal. Even the government’s suggested sentence of 12 years, he said, was not enough to deter either Kwon himself or “future Do Kwons” from committing similar frauds.

Engelmeyer expressed bewilderment at the leniency of the government’s suggested sentence, asking several times if there had been any “political influence involved” in the plea agreement between the two parties, an apparent reference to U.S. President Donald Trump’s recent spate of pardons for crypto executives mired in legal trouble. Both the defense and the prosecution denied that there had been anyone involved in the plea agreement beyond the Southern District of New York.

In a statement after the sentencing hearing, Jay Clayton, who runs the DOJ's Southern District of New York branch, said, "Do Kwon devised elaborate schemes to mislead investors and inflate the value of Terraform’s cryptocurrencies for his own benefit."

“When his crimes caught up to him, Kwon embarked on a deceptive public relations campaign to cover up his fraud, laundered the proceeds of his illegal schemes, and sought to purchase political protection in foreign countries to evade criminal prosecution," he said. "Let there be no mistake, fraud is fraud whether it takes place on our streets, in our securities markets, or in our emerging and important digital asset ecosystem, and no matter where in the world criminals may seek refuge, the women and men of the Southern District of New York will relentlessly pursue justice for investors and protect the integrity of financial markets."

In August, Kwon pleaded guilty to one count of conspiring to commit commodities fraud, securities fraud and wire fraud, and one count of committing wire fraud in connection with fraudulent schemes at Terraform Labs. During his plea hearing before Judge Engelmeyer, the 33-year-old South Korean national admitted that he “knowingly engaged in a scheme to defraud and did, in fact, defraud” purchasers of the TerraUSD (UST) stablecoin.

Under Kwon’s leadership, Terraform Labs was the first proverbial domino to fall in the 2022 crypto collapse, triggering a cascade of liquidations and wipeouts that ended with the implosion of once-mighty FTX in November 2022. Former FTX CEO Sam Bankman-Fried is currently serving a 25-year prison sentence for fraud revealed in the exchange’s collapse, and Alex Mashinsky, founder of bankrupt crypto lending platform Celsius Network, is currently serving a 12-year sentence for fraud.

When addressing the court during his sentencing hearing, Kwon reiterated his guilt in the scheme, saying:

“The blame should be pointed at me,” he said. “I have spent almost every waking moment of the last few years thinking of what I should have done differently, and what I can do now to make this right.”

When Kwon mentioned his wife and four-year-old daughter, who are both based in South Korea, he began to cry.

“I love my wife and daughter very much,” Kwon said. “I hope Your Honor will not think too harshly of my request to be closer to my family.”

Engelmeyer told Kwon that he was very sympathetic for his daughter, who will grow up without her father in her life, but did not extend the same sympathy for Kwon himself. Instead, he pointed to the hundreds of victim impact statements detailing families destroyed and lives derailed by Kwon’s fraud.

“Reading these letters is like taking a bracing epistolary tour of the human devastation you caused, Mr. Kwon,” the judge said.

The letters from investors praising Kwon, he added, read like “letters from a fan club.”

“To read some of these letters is like reading the words of cult followers for whom the Kool-aid has not yet worn off,” Engelmeyer said.

In exchange for Kwon’s guilty plea this summer, prosecutors slashed the original nine-count indictment — under which Kwon faced a maximum sentence of 135 years in prison if convicted on all counts — to just two, under which Kwon faces a maximum combined sentence of 25 years in prison. However, as part of the plea agreement, prosecutors agreed to recommend a sentence of just 12 years in prison and, once Kwon has served half of his ultimate sentence, to support any motion he makes for an international prison transfer back to South Korea.

Kwon’s potential transfer back to his native country appeared to concern Engelmeyer, who asked in a court filing ahead of the sentencing what “assurance” the U.S. would have that Kwon would not be released before the end of his prison sentence. Engelmeyer also pressed both prosecutors and Kwon’s defense attorneys for answers to other questions, including whether Kwon was still facing pending criminal charges in South Korea, and whether he should receive credit for the 17-month stint he did in Montenegrin custody before he was finally extradited to the U.S. in January.

In a written response filed to the court Wednesday, prosecutors said they did not have any information about the charges in South Korea, but that their counterparts in South Korea had said they could not disclose what punishment they intended to seek, but that it appeared Kwon would be fighting his charges there.

The memo also said that the Bureau of Prisons would give Kwon credit for the time he spent in a Montenegrin prison "in excess of the four-month period he served for his separate passport fraud crime" there, though there is no agreement about how much credit he would specifically receive.

UPDATE (Dec. 11, 2025, 23:01 UTC): Adds additional detail, including judge's comments, Do Kwon's statement to the court and the U.S. Attorney's office statement.

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