Do Kwon, co-founder of Terraform Labs, was sentenced to 15 years in prison on December 11, 2025, in a case concerning the collapse of the algorithmic stablecoin TerraUSD (UST). His actions resulted in the loss of over $40 billion in investor wealth, marking one of the largest financial frauds in crypto history.
Kwon faced Judge Paul A. Engelmayer, who described his scheme as “a fraud on an epic, generational scale,” causing more damage than the FTX scandal. The sentence also included a denial of his request to serve his time in South Korea.
The Sentencing: A Day of Reckoning
The sentence was delivered after hours of testimony during which the court received over 300 letters detailing personal stories of loss. Many victims spoke about how Kwon’s actions affected them. One victim lost $400,000 meant for his children’s education, which led to family struggles. Another victim recounted losing $11,400 and struggling to pay bills. A heartbreaking letter came from a son whose father attempted suicide after losing his retirement fund.
Assistant U.S. Attorney Sarah Mortazavi led the prosecution, saying Kwon created a false impression of stability for the stablecoin. She pointed out that he used secret cash to support prices and made dismissive comments on social media after the crash. The prosecution suggested a 12-year sentence but asked the judge to think about the impact of Kwon’s actions on the broader market.
Kwon Gets 15-Year Sentence
Prosecutors also urged the judge to recognize the global ripple effects that hastened failures like Celsius and FTX. Kwon, however, expressed remorse in court and took responsibility for the pain his actions caused. His lawyer, Sean Hecker, claimed desperation, not greed, drove Kwon’s decisions and requested a five-year sentence to allow Kwon to reunite with his family.
Judge Engelmayer dismissed these requests, stating the 12-year suggestion was too lenient, and the five-year request was unreasonable. He decided on a 15-year sentence, focusing on the need to deter similar behavior in the crypto market. Meanwhile, Kwon must serve at least 85% of his sentence before he can be eligible for supervised release, and he will not be transferred abroad immediately.
The sentence included a $19 million forfeiture linked to Kwon’s illicit gains. The ruling underlines a growing regulatory stance against fraudulent practices in the crypto space and could set a precedent for future penalties against deceptive crypto executives.
Jonathan Agozie | July 24, 2026
