- Terraform Founder Do Kwon had been sentenced to 15 years in prison for his fraudulent schemes, which ultimately stripped unsuspecting victims of over $40 billion.
- Kwon will also forfeit over $19 million worth of his fraudulent profit, his crypto assets, and funds that accrue to him from Terraform.
Do Kwon, Terraform Labs Founder, has been sentenced to 15 years in prison for several counts of fraud and manipulation, per the US Department of Justice. As part of the verdict, the crypto entrepreneur will also forfeit over $19 million of his funds, including proceeds of his schemes and crypto assets.
Do Kwon Bags 15 Years In Prison For Terra-LUNA Fraud
After over two years of back and forths on Kwon’s extradition to the US from Montenegro, one of crypto’s biggest fraud cases would finally come to a definitive conclusion.
In March 2023, a fleeing Kwon was initially arrested in Montenegro while trying to board a flight to Dubai. He would later serve four months in jail, after which Montenegrin authorities further detained him for his international fraud cases.
In December 2024, Montenegrin authorities finally approved his extradition to the US, where he was first arraigned before Judge Robert W. Lehrburger of the Southern District of New York. Kwon initially denied the fraud charges levelled against him.
However, in August 2025, Kwon pled guilty to several counts of fraud and manipulation before Judge Paul A. Engelmayer of the United States District Court for the Southern District of New York.
Kwon allegedly manipulated clients and investors by claiming that Terraform’s ecosystem was powered by a fully decentralized system with automated mechanisms powering trade and user incentives.
In essence, he is accused of leading users to believe the system was user-governed, when it was actually run in the background by him and his associates.
According to US Attorney Jay Clayton, “Kwon devised elaborate schemes to mislead investors and inflate the value of Terraform’s cryptocurrencies for his own benefit.”
Kwon’s Manipulation Caused Unprecedented Crypto Losses
The Terra Protocol was built around its stablecoin TerraUSD (UST) and LUNA, where USDT could always be exchanged for $1 worth of LUNA and vice versa. However, in May 2021, the stablecoin de-pegged with its value dropping to as low as $0.92.
Instead of allowing organic price recovery through the decentralized protocol mechanism Kwon advertised, he agreed with a third-party trading firm to buy large amounts of UST to manually support its $1 peg.
In May 2022, the Terra-LUNA protocol ultimately collapsed with UST dropping dramatically to 2 cents and the LUNA token crashing from $5 to less than $0.05.
The Terra-LUNA crash cost victims over $40 billion. It also led to a massive sell-off in the cryptocurrency market, which cut down the market capitalization of all cryptocurrencies by about $500 million.
Kwon will now spend the next 15 years in prison for wire fraud, securities fraud conspiracy, and commodities fraud. Authorities will hold him in a temporary facility till the Bureau of Prisons determines where he will serve the long-term sentence.
The US District Court also disgorged him of over $19 million of crypto assets and funds related to his shares in Terraform.
