Do Kwon, the South Korean crypto entrepreneur behind one of the largest failures in digital asset history, is set to be sentenced in New York federal court on Thursday for his role in the $40 billion collapse of TerraUSD and LUNA in 2022.
Kwon, 34, co-founder of Singapore-based Terraform Labs, had once promoted TerraUSD (UST) as a groundbreaking algorithmic stablecoin designed to hold a $1 peg even during turbulent market conditions. But in his guilty plea, Kwon admitted that he misled investors, concealing the fact that the peg was secretly restored with the help of a high-frequency trading firm not the algorithm he claimed was responsible.
Prosecutors Seek at Least 12 Years
U.S. District Judge Paul A. Engelmayer will determine Kwon’s sentence in a hearing scheduled for 11 a.m. local time. Federal prosecutors have recommended a minimum of 12 years in prison, arguing that the Terra crash triggered a wider crisis across the crypto sector and caused billions in investor losses.
Kwon’s legal team, meanwhile, is pushing for a sentence capped at five years, hoping this will allow him to return to South Korea, where he also faces criminal charges.
The Misrepresentation Behind TerraUSD
Charging documents detail how Kwon assured investors in May 2021 that the “Terra Protocol” algorithm had automatically restored TerraUSD’s peg after a brief devaluation. In reality, he had orchestrated a covert intervention, directing a trading firm to purchase large amounts of the token to artificially stabilize it.
In court, Kwon admitted to making false statements:
“What I did was wrong,” he said, acknowledging that he failed to disclose the trading firm’s involvement in propping up UST.
Nine Federal Charges and a Massive SEC Settlement
Kwon was indicted in January on nine criminal counts, including:
- Securities fraud
- Wire fraud
- Commodities fraud
- Money-laundering conspiracy
He later pleaded guilty to two counts conspiracy to defraud and wire fraud.
In 2024, he additionally agreed to pay an $80 million civil fine and accepted a ban on participating in crypto markets as part of a sweeping $4.55 billion settlement with the U.S. Securities and Exchange Commission.
What Comes Next
Alongside his U.S. penalties, Kwon still faces prosecution in South Korea. As part of his plea deal, U.S. authorities have agreed not to oppose a future request for his transfer abroad once he completes half of his American prison sentence.
The sentencing marks a major turning point in one of crypto’s most dramatic and consequential collapses one that reshaped global views on stablecoins, regulation, and crypto accountability.
