US Prosecutors Seek 12-Year Sentence for Terraform Founder Do Kwon in Crypto Fraud Case
U.S. prosecutors are seeking a 12-year prison sentence for Do Kwon, founder of Terraform Labs, following his guilty plea to defrauding investors. The prosecution highlights that the collapse of Terraform caused losses that exceed those from the FTX, Celsius, and OneCoin scandals combined. This incident significantly contributed to the 2022 crypto downturn known as the Crypto Winter, with the Terraform ecosystem's market value previously peaking above $50 billion.
Central to the fraudulent scheme were UST, an algorithmic stablecoin, and its link to LUNA. Court filings reveal backdoor agreements, hidden trading activity, and deceptive metrics used to mislead investors. Prosecutors also emphasize Kwon's attempts to evade justice, including fleeing, providing misleading statements in interviews and tweets, and resisting extradition efforts, all supporting their call for a substantial prison term.
Sentencing is scheduled for December 11, 2025, in Manhattan federal court. Kwon's defense is requesting a five-year sentence, citing time served in Montenegro and potential prosecution in South Korea. By comparison, Sam Bankman-Fried is serving a 25-year sentence, and Celsius founder Alex Mashinsky received a 12-year sentence for fraud.
