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Do Kwon, the co-founder of Terraform Labs, has been sentenced to 15 years in prison after pleading guilty to wire fraud and conspiracy to defraud.
In a Thursday hearing in the US District Court for the Southern District of New York, Judge Paul Engelmayer ordered that Kwon serve 15 years in prison for his role in the collapse of Terraform, which wiped out about $40 billion from the crypto market in 2022. He will receive credit for time served in the US and 17 months of pre-extradition custody.
Prior to making his decision on sentencing, Engelmayer heard from some of Terraform’s victims and questioned what kind of justice Kwon might face in his native South Korea, where authorities are also building a case against him.
“I would like everyone to know that I have spent all my time thinking what I could have done, and what I can do,” said Kwon prior to his sentencing, according to Inner City Press. “It’s been four years since the crash, three years since I’ve seen my family. I’d like to [do] my penance in my home country.”
Engelmayer reportedly said the 12-year recommendation US prosecutors had requested the court impose on Kwon was “unreasonable,” while the five years requested by the co-founder’s lawyers “would be so implausible it would require appellate reversal.”
“To the next Do Kwon, if you commit fraud, you will lose your liberty for a long time as you will here,” said Engelmayer, according to Inner City Press. “You have been bitten by the crypto bug, and I don’t think that’s changed. You must be incapacitated. If not for your guilty plea, my sentence would have been higher.”
The judge added, addressing Kwon:
“Your fraud was unusually serious. For four years you publicly lied to the market […] The investors were taking a risk, caveat emptor. But they were not taking the risk of being a fraud victim… What makes what you did so despicable is that you traded on trust.”
Kwon could be extradited to South Korea after serving seven and a half years, where he may complete the second half of his US sentence. He could face up to an additional 40 years in prison in his native country.
Several victims have their say during the sentencing hearing
Prosecutors said at the sentencing hearing that there were about 16,500 victims from the collapse of Terraform, according to claims in the company’s ongoing bankruptcy case. Six of them were allowed to address the court via phone before Engelmayer’s decision, describing their financial losses due to Terra.
“I sold my apartment in Moscow to invest with Do Kwon,” said Tatiana Dontsova, one of the victims, according to Inner City Press. “I moved to Tbilisi. $81,000 turned into $13 in the palm of my hand. Kwon came up with Luna 2, calling it LUNC. He is not showing any responsibility for those who invested. I am now officially homeless.”
Related: US judge asks for clarification on Do Kwon’s foreign charges
Kwon, alleged to have had a role in the 2022 collapse of the Terra ecosystem, was handed over to US authorities in December 2024 after his extradition from Montenegro. His legal team delayed proceedings for months by presenting various challenges in the Montenegrin courts.
With Kwon expected to be in prison for years, the Terraform co-founder became the latest former high-profile cryptocurrency executive to enter a plea deal or be found guilty in US courts.
Former FTX CEO Sam Bankman-Fried is serving a 25-year sentence, former Binance CEO Changpeng Zhao served four months — though was later pardoned by US President Donald Trump — and former Celsius CEO Alex Mashinsky was sentenced to 12 years.
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