Do Kwon Sentenced to 15 Years in Prison for $40 Billion Terra/Luna Collapse
Do Kwon, the founder of Terraform Labs, was sentenced to 15 years in federal prison by the Southern District of New York (SDNY) for his role in the collapse of Terra/Luna, which wiped out about $40 billion in market value in 2022. The crash triggered significant losses for retail investors and caused cascading unwinds across multiple lenders. Terraform Labs remains in bankruptcy, and SEC civil penalties related to the case are still ongoing.
Prosecutors argued that Kwon misled investors about the reserves backing TerraUSD (UST) and the stability of the algorithmic design. The judge described the damage as "eye-popping" and noted statements from victims who reported financial ruin. In court, Kwon apologized, taking responsibility and acknowledging that he failed to operate the system properly, stating his aim to prevent similar mistakes in the future.
The 15-year sentence is mid-range and below the more than 40 years prosecutors sought. The case was considered one of crypto's biggest black swan events and significantly influenced the bear market dynamics in 2022. Prior to his conviction, proceedings included a global manhunt and extradition attempts.
