U.S. court sentencing: Guilty plea by Terra-Luna cryptocurrency crash mastermind, Do Kwon, could result in a maximum term of 12 years imprisonment.
In a significant turn of events, Terraform Labs founder Do Kwon pleaded guilty on August 12, 2025, to two fraud charges related to the collapse of the Terra stablecoin ecosystem. The global incident caused around $40 billion in investor losses worldwide.
Kwon's sentencing hearing is scheduled for December 11, 2025. The plea deal, which shortens what could have been a much longer sentence, may expedite the legal process.
Regarding sentencing length, federal sentencing guidelines suggest about 25 years in prison for Kwon's charges. However, under his plea agreement, the U.S. government has agreed not to seek more than 12 years in prison, provided Kwon complies with the terms of the deal. The final sentence will be determined at the judge's discretion, and it could be higher than the prosecution's recommended 12 years.
Kwon admitted to conspiring to commit commodities fraud, securities fraud, and wire fraud, along with executing wire fraud. These charges were linked to how he misrepresented the Terra blockchain technology and manipulated markets to maintain TerraUSD’s $1 peg. He also agreed to forfeit over $19 million and interests in Terraform Labs and its cryptocurrencies.
The case is significant in setting legal precedent for cryptocurrency fraud prosecutions amid intensified regulatory scrutiny. Kwon, who is the founder of the Singapore-based tech firm that operated TerraUSD and Luna, was arrested in Europe on March 23, 2023, while traveling on a false passport. US authorities submitted a formal request for Kwon's arrest and extradition on March 25, 2023. Kwon was extradited from Montenegro to the US on Dec. 31, 2024.
In a surprising twist, if Do Kwon serves half of his final sentence and complies with the plea terms, he may be allowed to serve the remainder of his sentence in South Korea through the International Prisoner Transfer Program. Kwon was also booked in South Korea on charges including violations of the Capital Markets Act.
Sources:
[1] The New York Times. (2023, March 25). U.S. Seeks Arrest of Terraform Labs Founder Do Kwon. Retrieved from https://www.nytimes.com/2023/03/25/business/crypto/terra-do-kwon-arrest.html
[2] Reuters. (2025, August 12). Terraform Labs Founder Do Kwon Pleads Guilty to Fraud Charges. Retrieved from https://www.reuters.com/business/finance/terraform-labs-founder-do-kwon-pleads-guilty-fraud-charges-2025-08-12/
[3] CNBC. (2025, August 12). Do Kwon Pleads Guilty to Fraud Charges in Terra Collapse Case. Retrieved from https://www.cnbc.com/2025/08/12/do-kwon-pleads-guilty-to-fraud-charges-in-terra-collapse-case.html
[4] Bloomberg. (2025, August 12). Do Kwon Pleads Guilty to Fraud Charges in Terra Collapse Case. Retrieved from https://www.bloomberg.com/news/articles/2025-08-12/do-kwon-pleads-guilty-to-fraud-charges-in-terra-collapse-case
In the realm of finance and business, the plea deal struck by Terraform Labs founder Do Kwon on August 12, 2025, in a general-news case involving fraud charges, has potential implications for the cryptocurrency industry, specifically in crime-and-justice matters. The case stems from Kwon's role in the collapse of the Terra stablecoin ecosystem, which resulted in approximately $40 billion in global investor losses.
