Do Kwon Sentenced to 15 Years in Prison for $40 Billion Terra/Luna Crypto Collapse
Do Kwon was sentenced to 15 years in prison by a Manhattan federal court for fraud tied to the $40 billion collapse of Terra/Luna in May 2022. Kwon had pleaded guilty to multiple fraud charges in August. The judge described the fraud as "unusually serious," stating, "You chose to lie." Prosecutors sought a 12-year sentence, while the defense requested five years. Ultimately, the judge imposed a 15-year sentence.
As part of his plea agreement, Kwon is to forfeit $19 million along with some properties. During sentencing, Kwon expressed remorse while wearing a yellow jumpsuit and expressed a desire to serve part of his sentence in South Korea. Prosecutors agreed to allow the second half of his sentence to be served in South Korea.
The judge likened Kwon to a cult leader, noting he exploited the trust of his victims and pointed to his social media posts such as "Deploying more capital - steady lads" as contributing to the harm. Victims' statements highlighted their losses, including a Ukrainian man who lost nearly $200,000.
The Terra ecosystem's collapse originated from its UST algorithmic stablecoin losing its peg, as it was not backed by liquid assets. Terra's Anchor Protocol had offered unsustainably high yields of about 20%, which was a contributing factor. Prior to Kwon's sentencing, the company agreed to a $4.5 billion civil settlement with the SEC in April, and TerraLabs subsequently dissolved.
Kwon was previously detained in Montenegro amid an extradition fight after being arrested with a forged passport.
