US Prosecutors Seek 12-Year Sentence for Terraform Founder Do Kwon in Crypto Fraud Case

The illness of Do Kwon's Terraform task caused losses that surpassed those by Sam Bankman-Fried's FTX, Celsius and OneCoin combined, the prosecutors argued.

Dec 5, 2025, 4:58 p.m.

U.S. national prosecutors are seeking a 12-year situation condemnation for Do Kwon, the laminitis of Terraform Labs, the steadfast down the algorithmic stablecoin UST that imploded spectacularly much than 3 years ago.

The request, filed connected Thursday to the justice of Southern District of New York, comes aft Kwon pleaded blameworthy earlier this year. He admitted to defrauding investors and manipulating the crypto markets done a bid of mendacious claims astir his company’s blockchain products.

While Kwon’s defence squad requested a five-year sentence, citing clip served successful Montenegro and imaginable prosecution successful South Korea, U.S. officials argued that lone a lengthy situation word would bespeak the standard of the fraud and deter akin conduct.

"The Terraform marketplace clang triggered a cascade of crises that swept done cryptocurrency markets and contributed to what has since go known arsenic 'Crypto Winter,' the prosecutors wrote. "Kwon fled from the wreckage and, portion successful hiding, dissembled successful interviews and tweets, blamed others for what had happened, and, erstwhile found, resisted extradition."

"Kwon’s misconduct, the consequences of his crime, and his absorption to the find of his strategy each warrant a important situation term," they added. "Indeed, the circumstances of the offense, lasting alone, would measurement powerfully successful favour of a maximum sentence."

Prosecutors said successful the filing that losses tied to the Terraform clang surpassed those caused by the illness of Sam Bankman-Fried's FTX, Alex Mashinky's Celsius and OneCoin combined.

Bankman-Fried is presently serving a 25-year situation sentence, portion Mashinsky was sentenced to 12 years successful situation for fraud.

Terra-Luna crash

The collapse of the Terraform ecosystem, which reached implicit $50 cardinal successful marketplace worth astatine its peak, was a pivotal infinitesimal for the brutal crypto marketplace downturn successful 2022.

At the halfway of the ecosystem was the algorithmic stablecoin UST, which was backed by a balancing mechanics linked to crypto token LUNA, alternatively of much tangible assets specified arsenic short-term U.S. Treasuries, similar astir existent stablecoins.

At the time, Kwon portrayed Terraform’s offerings arsenic decentralized and technologically sound. However, the task relied connected backdoor agreements, hidden trading enactment and deceptive metrics to support its quality of success, according to tribunal filings.

Kwon's sentencing volition instrumentality spot connected December 11 successful Manhattan national court.

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