Do Kwon Handed 15-Year Prison Term Over Terrausd Fraud That Fueled 2022'S Crypto Meltdown

• Kwon pleaded guilty to two fraud counts after prosecutors reduced a broader nine-count indictment.
• Victims testified about heavy financial losses from TerraUSD's collapse.
• He must serve half his term before seeking transfer to South Korea, where he still faces charges.

Terraform Labs co-founder Do Kwon was sentenced to 15 years in U.S. federal prison on Wednesday for fraud tied to the TerraUSD collapse, which erased tens of billions of dollars and unleashed a broader meltdown across the crypto sector.

Crypto's 2022 Meltdown

Kwon had already, as part of his plea hearing, confessed to having“knowingly engaged in a scheme to defraud and did, in fact, defraud” TerraUSD (UST) buyers. UST was an algorithmic stablecoin that imploded in May 2022 and caused a deflation of tens of billions of dollars in market capitalization, CoinDesk reported. 

Prosecutors alleged that Kwon's behavior prolonged the“crypto winter” of 2022, as well as contributed to the collapses of FTX and Celsius that also occurred the same year.

How The Case Reached Sentencing

Kwon pleaded guilty in August to two fraud-related charges under a deal that wiped out a nine-count indictment that could have put him away for 135 years. The revised charges carried a 25-year maximum, and prosecutors urged the judge to give him 12. His attorneys requested no more than five, claiming his conduct was intended to protect TerraUSD, not enrich himself.

Victims described losses during a lengthy hearing, testifying in person and by phone about the financial damage from Terra's crash.

International Proceedings

Kwon must serve at least half of his U.S. sentence before applying for transfer to South Korea, where separate fraud charges are pending. Judge Engelmayer also raised the issue of how the U.S. would know what Kwon would do if he were moved to another country. He also questioned if the 17 months Kwon spent in custody in Montenegro, where he was arrested for a passport crime, should be credited towards his sentence.

Kwon was extradited to the U.S. in January, following a lengthy legal battle.

Shifts In US Crypto Oversight

The sentencing comes at a time when Washington's stance toward crypto oversight has shifted. In October, U.S. President Donald Trump issued a pardon to Binance founder Changpeng Zhao, who had been convicted for lapses in the exchange's anti-money-laundering controls.

For updates and corrections, email newsroom[at]stocktwits[dot]com.

MENAFN11122025007385015968ID1110470439