TerraForm Lab’s founder Do Kwon just got sent to jail for a whole 15 years, despite multiple lawyers forecasting a 12-year prison sentence. The controversial crypto entrepreneur was blamed for the $40 billion Terra Luna ecosystem collapse back in mid 2022, crumbling both LUNA & UST tokens to pieces.
“A truly epic fraud”, – said the Honorable Judge Paul A Engelmayer. Surely, the Southern New York District Judge is referring to the rapid downswings of Terra USD (UST) stablecoin, going from the promised $1 peg to pennies on the dollar in a matter of weeks back in 2022. This has pushed LUNA to a drastic 99% pullback in the same time frame.
Now that the crypto mogul is sent behind bars, there’s a couple of things cleared up. Dressed in a yellow garb, Do Kwon spoke in court admitting that the supposed USDT stablecoin was a hoax, not exactly algorithmically tied to the United States (USD) Dollar as promoted. Another key finding is that the original LUNA chain, rebranded as LUNC, has distanced itself from Kwon.
Do Kwon’s top attorney Sean Hecker said the controversial crypto entrepreneur was genuinely sorry about what happened, expressing unalloyed remorse when one of the victims, Mr. Ayyildiz Attila, cried in court: “My savings, my future, and the results of years of sacrifice disappeared. I struggled to keep up with payments and responsibilities, and everything I had worked for was erased”.
As the big news hit, both Kwon-initiated tokens Terra Luna Classic (LUNC) & Terra 2.0 (LUNA) dipped by 25% to erase half of the gains picked up since last week. However, LUNC is still 35% up in monthly terms due to continuous volunteer community support. On top of that, Binance has shown extended dedication towards reducing LUNC’s supply, contributing millions of burns monthly.
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Do Kwon, co-founder of Terraform Labs, was sentenced to 15 years in prison on December 11, 2025, by a U.S. federal court in New York for fraud related to the 2022 collapse of the Terra ecosystem.
Kwon pleaded guilty in August 2025 to conspiracy to commit securities fraud, commodities fraud, and wire fraud, admitting he misled investors about TerraUSD’s stability.
The May 2022 de-pegging of TerraUSD (UST) and crash of Luna wiped out approximately $40 billion in market value, triggering a broader “crypto winter” and contributing to failures like FTX.
U.S. District Judge Paul A. Engelmayer described Kwon’s actions as causing “incalculable human wreckage” and “monetary harm on a generational scale,” citing over 300 victim impact letters detailing life-altering losses.
Kwon must forfeit over $19 million in proceeds; he previously agreed to an $80 million SEC fine and a lifetime ban from crypto transactions as part of a $4.55 billion settlement.
Wearing prison garb, Kwon apologized to victims, stating he had reflected deeply on his actions and sought to make amends, though the judge noted the apology came years after the collapse.
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