Terraform Labs co-founder Do Kwon was sentenced to 15 years in federal prison on Thursday for leading a massive $40 billion cryptocurrency fraud. Interestingly, this sentence is much lighter than the 25-year sentence given to FTX founder Sam Bankman-Fried (SBF) last year. However, Kwon's fraud was nearly four times the financial damage caused by SBF.
This penalty difference clearly shows that the defendant's attitude, remorse, and cooperation with the authorities can significantly change the outcome of court proceedings.
Rulings
U.S. District Judge Paul Engelmayer, overseeing Kwon's case in the Southern District of New York, characterized the Terra-Luna collapse as 'a fraud of unprecedented magnitude that will be remembered for generations.' While he found the prosecution's request for a 12-year sentence 'excessively lenient,' he dismissed the defense attorneys' request for 5 years, calling it 'incredible and utterly unreasonable.'
Engelmayer told Kwon, 'What you did caused real people to lose a total of $40 billion; these losses are not just numbers on paper.' He also noted that the number of victims worldwide could reach one million.
In contrast, Judge Lewis Kaplan sentenced SBF to 25 years in prison for $11 billion in fraud in March 2024. Kaplan emphasized that the defendant acted with 'an extremely flexible relationship with the truth' in court and 'showed no signs of real remorse.'
Where Does the Difference Come From?
To Accept Guilt or Go to Trial?
Kwon admitted to conspiracy and electronic fraud charges in August 2025, confessing that he misled investors about the stability mechanisms of TerraUSD. In a letter he sent to the court, he stated, 'The responsibility for the pain experienced is entirely mine. The community expected me to guide them, but I led them astray with my arrogance.'
SBF maintained his innocence until the court proceedings. He claimed that FTX only experienced a 'liquidity crisis' and that there was no clear fraud. The jury found SBF guilty on all seven charges in just four hours.
Courtroom Behavior Rules
Judge Kaplan found that SBF lied under oath at least three times during his testimony. Kaplan described SBF's performance in court as 'the most evasive defense I have seen in my 30 years on the bench.' He stated, 'Even in moments where he was clearly not lying, he was constantly evasive, dodging questions and beating around the bush.'
The judge also determined that SBF attempted to influence witnesses before the trial. SBF texted former FTX chief legal officer Ryne Miller, suggesting they 'discuss some matters in advance.'
In contrast, Kwon listened to each of the 315 letters submitted by victims in the case and directly apologized. He told Engelmayer, 'What I heard from the victims deeply shook me. It brought to light the losses I caused once again.'
Future Legal Position
The most critical factor in Kwon's sentence was the serious charges he still faces in South Korea. New cases that could arise from there mean up to 40 years of additional prison time. Judge Engelmayer explicitly stated in his decision that he considered this risk. Kwon is likely to be extradited to his country after serving his sentence in the U.S. and will be retried.
For SBF, there is no risk of being tried in another country in a similar manner. The 25-year sentence he received in the U.S. will remain his primary criminal sanction. However, SBF is still fighting against his conviction. In November 2025, SBF's lawyers filed an appeal and argued that 'since the beginning of the case, their client has been treated as guilty.' His lawyer, Alexandra Shapiro, claimed that the court did not allow vital evidence regarding FTX's solvency to be presented and that throughout the process, her client was treated prejudicially. It may take several months for the Second Circuit Court to make a decision.
Do KwonSam Bankman-FriedPenalty15 years25 yearsEstimated Loss40 billion dollars11 billion dollarsDefenseAdmits guiltConvicted by courtRegretApologized to victimsShowed no remorseFalse OathNo3 times detectedWitness InfluenceNoYesAdditional ChargesUp to 40 years of additional prison risk in South KoreaNo
Source: BeInCrypto General Perspective
Both cases are pivotal in the cryptocurrency market. Prosecutors noted that the damage caused by Kwon exceeds the combined total of SBF, OneCoin co-founder Karl Sebastian Greenwood, and former Celsius CEO Alex Mashinsky.
Court rulings send a clear message to the cryptocurrency community: Cooperation with authorities and genuine remorse can significantly reduce prison sentences.
Kwon agreed to forfeit $19.3 million as part of the settlement. In addition, he will pay a $80 million fine in the case he settled with the SEC in 2024 and will be banned from conducting cryptocurrency transactions for life.
His application to serve his sentence in South Korea was denied.
