Terraform Labs co-founder Do Kwon has been sentenced in the United States to 15 years in prison for fraud related to the collapse of the TerraUSD (UST) and LUNA tokens in 2022, reports CoinDesk.
In May 2022, the Terra ecosystem and the LUNA token, developed by Terraform Labs, collapsed, and the stablecoin UST lost its peg to the dollar. According to various estimates, the cumulative losses to the crypto community amounted to $40–60 billion—both from the token price crash and the failure of crypto services like Anchor, which offered inflated yields for deposits in UST. Kwon claimed at the time that the collapse was caused by the actions of third-party traders.
In 2023, Kwon was charged with nine counts, including fraud, market manipulation, and money laundering. In 2024, he was arrested in Montenegro with fake documents and later extradited to the United States. In August, he pleaded guilty to two of the charges.
The prosecution requested 12 years for Kwon, while his lawyers insisted on five. According to Judge Paul Engelmayer, the five-year sentence requested by the defense was "completely unthinkable and utterly unjustified."
"15 years is the minimum I can impose," the judge said.
Engelmayer explained that he took into account the "staggering" scale of Kwon's fraud, both in terms of the money lost and the number of victims, as well as the fact that he attempted to evade justice by fleeing first to Serbia and then to Montenegro on fake passports before being caught en route to Dubai.
In his hour-long speech, the judge detailed Kwon's numerous deceptions and called his behavior "disgusting," particularly during the final de-pegging of UST, when Kwon publicly advised retail investors to continue investing while he and other project associates privately began withdrawing their funds.
The prison term will be reduced by 17 months spent in a Montenegrin prison. Kwon will also be eligible for transfer to South Korea after serving half of his sentence. In addition to imprisonment, Kwon may face asset forfeiture of $19 million.
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