On December 11, 2025, a federal court in New York sentenced Do Kwon, co-founder of Terraform Labs, to 15 years in prison for fraud that led to the collapse of the Terra/Luna ecosystem in 2022, resulting in losses of about $40 billion. Judge Paul Engelmayer called it "fraud of epic, generational scale," which caused enormous harm to investors, including loss of savings and even cases of suicide.
Kwon, a 34-year-old Stanford graduate, admitted guilt in August for conspiracy to commit fraud and wire fraud. He misled investors about the stability of the stablecoin TerraUSD (UST), hiding manipulations to maintain the peg to the dollar. The collapse triggered a chain reaction in the crypto market, contributing to the fall of FTX and other platforms.
Prosecutors requested 12 years, the defense - 5, but the judge chose a harsher sentence. Kwon will receive credit for 17 months in Montenegro before extradition. He also has to pay fines and is prohibited from engaging in crypto.
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