Do Kwon Sentenced to 15 Years Over $40B Terra/Luna Fraud

Do Kwon, co‑founder of Terraform Labs, was sentenced to 15 years in a U.S. federal prison after pleading guilty to conspiracy to defraud and wire fraud tied to the 2022 collapse of the TerraUSD (UST) stablecoin ecosystem and LUNA tokens. U.S. District Judge Paul A. Engelmayer called the scheme a “fraud on an epic, generational scale,” noting about $40 billion in investor losses and widespread harm. The 15‑year term exceeds the 12 years sought by prosecutors and far outstrips the five years requested by the defense; Kwon will receive credit for roughly 17 months and 8 days of pre‑extradition custody. He agreed in plea deals to forfeit assets to compensate victims and to settle related SEC civil claims requiring substantial payments. Market reaction was negative: Terra Classic (LUNC) fell nearly 20% in 24 hours and the newer LUNA dropped over 10% following the sentence. Kwon still faces potential additional charges in South Korea that could add decades to his legal exposure. The case underscores intensified cross‑border enforcement of crypto fraud, and traders should reassess risk exposure, compliance implications and liquidity for residual Terra tokens.