Do Kwon could go to prison for 12 years

U.S. prosecutors are seeking at least 12 years in prison for Terraform Labs co-founder До Квон" href="https://noworries.news/biography/do-kvon/" data-bio-id="3665">Do Kwon, accusing him of fraud that caused «colossal» losses to investors. His defense team is asking for a reduced sentence of five years, citing three years spent in prison in Montenegro and a possible 40-year sentence in South Korea. Kwon is accused of minimizing the seriousness of the crimes, and prosecutors believe that his «half-truths and lies» justify a harsh sentence.

According to the U.S. Attorney’s Office for the Southern District of New York, Kwon organized a large-scale fraud that wiped out more than $ 40 billion in investor funds as a result of the collapse of the TerraUSD and Luna ecosystems in May 2022. This remains the largest collapse in the history of cryptocurrencies, exceeding even the losses of FTX investors. The materials filed with the court state that Kwon «intentionally misled investors» by calling the algorithmic stablecoin UST «mathematically impossible to lose peg».

Prosecutors described that every time the dollar peg faltered, the Terraform Labs team secretly rescued the system with third-party funds without disclosing it publicly. One example was in May 2021, when a private trading company injected $ 150 million to restore the exchange rate. The US government called these actions part of a deliberate deception that created the illusion of stability and subsequently caused a catastrophic collapse.

After the collapse, Do Kwon fled to Montenegro using a fake passport and evaded extradition for more than two years, publicly blaming «market forces.» In August 2025, he pleaded guilty to conspiracy to commit wire fraud and wire fraud. In the United States, $ 19.3 million is also subject to forfeiture, and the SEC’s civil action seeks $ 4.7 billion against Terraform Labs and $ 204 million against Kwon personally.

The sentencing hearing is scheduled for December 11 before Judge Paul Engelmeyer. The prosecutor’s office called the request for a five-year sentence «completely inadequate» and emphasized that the harsh punishment is a necessary signal to the industry, which now has a market capitalization of more than $ 3.1 trillion. According to experts, Terra’s collapse became a starting point for strengthening control over stablecoins and the transition of the crypto market from the experimental phase to a more regulated model.