New York – December 12, 2025 – Do Hyeong Kwon, the 34-year-old South Korean founder of the collapsed Terra cryptocurrency ecosystem, was sentenced to 15 years in federal prison on Thursday in one of the most devastating financial fraud cases in American history. U.S. District Judge Paul A. Engelmayer, handing down the sentence in Manhattan federal court, described Kwon’s actions as “a fraud on an epic, generational scale” that wiped out an estimated $40 billion of ordinary people’s money in a matter of days.
Kwon, wearing yellow prison clothing, stood quietly as the judge rejected both the government’s recommendation of 12 years (“unreasonably lenient”) and the defense request for five years (“utterly unthinkable and wildly unreasonable”). The maximum possible sentence under Kwon’s August plea deal had been 25 years.
“This was not some paper loss,” Judge Engelmayer told the courtroom. “Your offense caused real people to lose $40 billion in real money. In the history of federal prosecutions, there are few frauds that have caused as much harm as you have, Mr. Kwon.”
The collapse of TerraUSD (UST) and its sister token Luna in May 2022 triggered a domino effect that accelerated the entire crypto winter. UST was marketed as an “algorithmic stablecoin” that would magically hold a $1 value without traditional reserves, thanks to an arbitrage relationship with Luna. When confidence faltered, the mechanism spiraled into a death spiral: Luna’s supply exploded from millions to trillions of tokens, rendering both coins essentially worthless in under 72 hours.
The human cost was staggering. More than 300 victim-impact statements flooded the court, describing shattered retirements, postponed surgeries, college funds that vanished, and charities forced to close programs. One man wrote that his elderly father contemplated suicide after losing his life savings. A Ukrainian family told the judge they had to move back in with grandparents because their children’s university money disappeared overnight. Another victim, a 58-year-old woman, said she was left homeless in Georgia with just $13 remaining from an $81,000 investment.
Kwon, once a brash Stanford graduate who taunted critics on Twitter and called himself “the ecosystem,” spoke briefly in court. “All of their stories were harrowing and reminded me again of the great losses I’ve caused,” he said, his voice low. “I want to tell these victims that I am sorry.”
Prosecutors said the combined losses from Terra exceeded those caused by Sam Bankman-Fried’s FTX fraud and the OneCoin pyramid scheme put together. They estimated up to a million people worldwide were affected, including roughly 200,000 in South Korea alone.
As part of his guilty plea to wire fraud and conspiracy charges, Kwon agreed to forfeit more than $19 million. His lawyers argued that his actions stemmed from hubris and panic rather than pure greed. The judge was unmoved, noting that Kwon had fled Singapore days before the crash, used fake passports, and fought extradition for nearly two years before finally being sent to the United States from Montenegro in March 2025.
Judge Engelmayer also denied Kwon’s request to serve his sentence in South Korea, where he still faces separate criminal charges that could add decades behind bars and where his wife and young daughter live.
The Terra collapse is widely seen as the spark that ignited the broader 2022–2023 crypto meltdown, leading to the bankruptcies of Three Arrows Capital, Voyager Digital, Celsius Network, and eventually FTX. Thursday’s sentencing marks another milestone in the U.S. government’s crackdown on cryptocurrency fraud, following lengthy prison terms for Bankman-Fried (25 years) and Celsius founder Alex Mashinsky (12 years).
For the hundreds of thousands of ordinary investors who believed Kwon’s promises of a revolutionary, risk-free financial system, 15 years behind bars offers little comfort. As one victim wrote in a letter read aloud in court: “You sold us a dream and delivered a nightmare.”
