Terraform Co-Founder Do Kwon Sentenced to 15 Years

Published Dec 12, 2025

1 min read

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Summary

Do Kwon, co-founder of Terraform Labs, sentenced to 15 years for fraud linked to TerraUSD collapse.

Terraform co-founder Do Hyeong Kwon has been sentenced to 15 years in U.S. federal prison after pleading guilty to fraud charges related to the TerraUSD and LUNA collapse in 2022.

The sentencing underscores increased regulatory scrutiny on algorithmic stablecoins and highlights legal accountability in crypto, impacting investor trust and market dynamics.

Do Hyeong “Do” Kwon, co-founder of Terraform Labs, has been sentenced to 15 years in prison. He pleaded guilty to fraud charges related to the collapse of TerraUSD and LUNA, which shook the cryptocurrency market in 2022.

Terraform Labs, the company behind TerraUSD and LUNA, suffered a dramatic decline, erasing $40 billion in market valuation. Kwon’s misrepresentations about TerraUSD’s stability were central to the collapse. This led to significant legal repercussions.

Kwon to Forfeit $19 Million Amidst Mixed Reactions

Kwon has agreed to forfeit over $19 million in assets. This move doesn’t affect Terraform Labs‘ already troubled financial state. Community responses highlight mixed sentiments, focusing on potential recovery and legal closure.

Market sentiment remains tense, with renewed regulatory focus on stablecoins. Historical losses and algorithmic failures in TerraUSD have heightened concerns over similar assets. Increased scrutiny is anticipated for algorithmic stablecoins.

Regulatory Implications Mirror FTX’s Sam Bankman-Fried Case

Kwon’s sentencing is reminiscent of Sam Bankman-Fried’s case with FTX, highlighting large-scale repercussions in the digital assets domain. Both involved fraud and significant investor losses.

Experts underline that increased regulatory frameworks are expected. Historical trends suggest tightening controls around algorithmic stablecoin practices to prevent similar incidents. Stakeholders urge for clear guidelines to avoid misleading marketing practices.

“I alone am responsible for everyone’s pain. The community looked to me to know the path, and I in my hubris led them astray.” – Do Hyeong “Do” Kwon, Co-founder and CEO of Terraform Labs

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