A trial 1,314 days overdue: The mastermind behind the collapse of a $40 billion stablecoin was sentenced to 15 years.

Author: Nancy, PANews

On December 11, 2025, 1314 days after the Terra crash, Do Kwon finally faced justice and was sentenced to 15 years in prison.

Although this epic scam has come to an end, the more than one million victims and the loss of $40 billion are undoubtedly an expensive and painful lesson in the history of cryptocurrency development.

Luna's dream shattered; sentenced to 15 years in prison

On December 11, Do Kwon, dressed in a yellow prison uniform from the Essex County Jail in New Jersey, sat in the defense dock accompanied by four lawyers. This once-glorious crypto tycoon faced his final trial.

At the hearing, Kwon's defense team attempted to appeal to public sentiment, requesting the judge to limit his sentence to five years or less. They argued that Kwon's crimes stemmed more from arrogance and desperation than from extreme personal greed, and pointed out that he was already serving time in Montenegro and might face prosecution in South Korea.

However, this claim was strongly refuted by US prosecutors. They pointed out that Terraform Labs' concept of a stablecoin, and its claims of successful implementation through applications like Chai, were built on lies from the outset. At its peak, Kwon's token value skyrocketed, and he even named his daughter "Luna" in honor of his supposed "greatest invention."

The prosecution emphasized that the $40 billion collapse of the Terra ecosystem not only triggered a chain reaction of crises across the entire crypto market but also indirectly led to the bankruptcy of SBF's FTX exchange and triggered a crypto winter. (Related reading: LUNA and UST are deeply mired in the "Big Short" ) Faced with such devastating consequences, Kwon and his supporters attempted to construct a "counter-narrative," describing the collapse as a black swan event or market manipulation, showing no remorse whatsoever. Furthermore, Kwon's embezzlement of funds, use of fake passports to flee to Singapore and Montenegro, and even attempts to travel to the UAE, all demonstrate his extremely high risk of recidivism. Based on this, the prosecution recommended a 12-year prison sentence.

However, U.S. District Judge Engelmayer rejected the defense's absurd request for a five-year sentence, while also stating that the prosecution's recommended 12 years was too lenient and failed to reflect the devastating impact on the victim.

“This is an epic, generational fraud. Few frauds in the history of federal prosecutions have caused as much damage as this.” Judge Engelmayer harshly criticized Kwon for choosing to deceive investors who had entrusted their life savings to him instead of telling the truth, and for going down the wrong path. He specifically mentioned the infamous tweet, “Deploying more capital – steady lads.”

Ultimately, the judge sentenced Kwon to 15 years in prison.

In addition to the United States, Kwon will still face fraud charges in South Korea. At the hearing, Kwon stated that he hadn't seen his family for three years and hoped to serve his sentence in South Korea. In response, US prosecutors stated that if Kwon complies with the plea agreement, they will support his application to be transferred to South Korea to continue serving his sentence after serving half of his sentence. In August of this year, Kwon pleaded guilty to two counts of conspiracy to commit fraud and cyber fraud, and as part of the plea agreement, he also agreed to forfeit more than $19 million in assets and some real estate.

Over a million victims, a mysterious force controlling the community.

From his arrest at Podgorica Airport in Montenegro in March 2023 to his imprisonment in the United States in December 2024, this legal tug-of-war that lasted 20 months finally came to an end in a federal court in New York.

Kwon's arrest sparked an extradition battle between the United States and South Korea. During this period, he reached a settlement agreement with the U.S. Securities and Exchange Commission (SEC) for a staggering $4.5 billion, including the forfeiture of $3.6 billion in illicit gains. After more than a year of detention and diplomatic maneuvering, Montenegrin authorities finally transferred him to U.S. law enforcement at the end of last year. Facing nine charges from U.S. prosecutors, including securities fraud and wire fraud, Kwon initially pleaded not guilty.

It wasn't until August of this year that Kwon pleaded guilty to two counts of financial fraud, admitting, "I concealed the truth about the trading firm's intervention to restore the anchor, made false statements, and my actions were wrong." Given his guilty plea, although the maximum statutory sentence is 25 years, U.S. prosecutors recommended a sentence of no more than 12 years.

This trial not only concerns Kwon's personal fate, but also touches the nerves of millions of Terra victims worldwide.

An unexpected incident occurred on the eve of the hearing: the inefficiency of the US prosecutors drew the ire of Judge Engelmayer. The prosecutors only notified Terra victims on December 1st, and the bankruptcy administrator delayed sending the email until December 8th, leaving victims with virtually no time to submit their statements to the court. Judge Engelmayer stated that while the Terra bankruptcy case involved approximately 16,500 creditors, the number of victims behind it could be as high as millions, adding, "You need to do better."

Judge Engelmayer read through 315 hastily sent letters from victims overnight and stated bluntly that Kwon had an almost mystical control over Terra investors, many of whom were like cult followers under a spell, never to wake up.

At the hearing, the victims' accusations made the devastating impact of the Terra collapse all the more palpable. Some lost their homes, some lost their retirement savings and children's education funds, and some were even left homeless.

One victim wrote, “Do Kwon’s communications all said everything was under control. Then the breakdown happened, and I didn’t dare sleep for four days straight… We were told to trust him, and then he disappeared.” Another victim bitterly accused, “My trust was weaponized. Do Kwon packaged himself as a visionary, and my hard-earned capital evaporated.” Someone else lost $200,000 in savings accumulated over 17 years overnight, pleading in a letter, “Your Honor, please hold him accountable.”

Kwon, who heard parts of the letters over the phone, offered a belated apology to the victims in court. “Their stories are heartbreaking and have made me realize once again the immense damage I have caused. I want to tell these victims that I am sorry. For the past few years, almost every conscious moment has been spent thinking about what I could have done differently and what I can do now to make amends.” In a letter filed with the court last month, Kwon also wrote, “Looking back, I cannot understand my arrogance… I have borne the burden of everyone’s suffering alone. I hope that any sentence I accept will bring even a little comfort to those I have wronged.”

This confession is a stark contrast to his former arrogant image. Just hours before Terra crashed in May 2022, Kwon was still mocking critics on Twitter, even making the boastful statement, "I don't argue with the poor."

Note: Do Kwon's arrogant response to Frances Coppola's criticism of algorithmic stablecoin design.

An ironic scene unfolded in the courtroom. As Kwon, dressed in a yellow prison uniform and handcuffed, was led into the elevator, many supporters applauded him, with some even shouting, "Hold on, do it! Hold your head high!"