Do Kwon, co-founder of Terraform Labs, has been sentenced to 15 years in U.S. federal prison for his role in the collapse of the TerraUSD (UST) and LUNA ecosystem, which wiped out an estimated $40 billion in value. The sentence was delivered by Judge Paul Engelmayer in the Southern District of New York following Kwon’s guilty plea to wire fraud and conspiracy charges.
The case marks one of the largest enforcement actions in the crypto industry to date and closes a significant chapter in the aftermath of the 2022 market downturn.
Read also: The Collapse of LUNA and TerraUSD (UST) – How Did It Happen?
Plea Agreement and Sentencing Factors
Kwon pleaded guilty in August 2025 and accepted responsibility for misleading investors about the stability mechanisms of TerraUSD. In his statement to the court, he acknowledged his role in the losses and expressed regret to affected investors.
The court considered several factors in determining the sentence, including the extent of the financial damage, Kwon’s cooperation with authorities, and the likelihood of future legal proceedings in South Korea. Judge Engelmayer described the fraud as “unusually serious” but noted that the guilty plea and forfeiture of assets were mitigating factors.
Read also: How to recognize a crypto presale scam? Full guide
Market Response and LUNA Price Movement
The LUNA token, part of the Terra ecosystem, has seen increased price volatility in recent days. Over the past week, LUNA rose from around $0.08 to briefly trade above $0.20. Although it fell by approximately $0.03 in the past 24 hours, the token remains up around 55% over the week and 112% over the past month.
Read also: LUNA Surges 185% in a Week – What’s Behind the Moves?
Ongoing Legal Risk and Civil Proceedings
Kwon may face additional prosecution in South Korea, where authorities have filed separate charges that could carry a sentence of up to 40 years. He may be eligible for transfer after serving half of his U.S. sentence.
In parallel, Terraform Labs and Kwon are subject to civil penalties from the U.S. Securities and Exchange Commission. A consent judgment finalized earlier this year includes over $4.5 billion in disgorgement, fines, and penalties, with investor compensation taking priority.
