US Prosecutors Seek 12-Year Sentence for Terraform Founder Do Kwon in Crypto Fraud Case

Policy Share Share this article Copy link X icon X (Twitter) LinkedIn Facebook Email US Prosecutors Seek 12-Year Sentence for Terraform Founder Do Kwon in Crypto Fraud Case The collapse of Do Kwon's Terraform project caused losses that surpassed those by Sam Bankman-Fried's FTX, Celsius and OneCoin combined, the prosecutors argued. By Krisztian Sandor | Edited by Jamie Crawley Dec 5, 2025, 4:58 p.m. Do Kwon (CoinDesk archives) What to know : U.S. prosecutors recommended a 12-year sentence for Do Kwon, founder of Terraform Labs, after he pleaded guilty to defrauding investors. The Terra-Luna crash contributed heavily to the brutal 2022 market downturn often called "crypto winter." The request comes ahead of Kwon's sentencing on December 11 in Manhattan federal court. U.S. federal prosecutors are seeking a 12-year prison sentence for Do Kwon, the founder of Terraform Labs, the firm behind the algorithmic stablecoin UST that imploded spectacularly more than three years ago. The request, filed on Thursday to the judge of Southern District of New York, comes after Kwon pleaded guilty earlier this year. He admitted to defrauding investors and manipulating the crypto markets through a series of false claims about his company’s blockchain products. STORY CONTINUES BELOW Don't miss another story. Subscribe to the State of Crypto Newsletter today . See all newsletters Sign me up By signing up, you will receive emails about CoinDesk products and you agree to our terms of use and privacy policy . While Kwon’s defense team requested a five-year sentence, citing time served in Montenegro and potential prosecution in South Korea, U.S. officials argued that only a lengthy prison term would reflect the scale of the fraud and deter similar conduct. "The Terraform market crash triggered a cascade of crises that swept through cryptocurrency markets and contributed to what has since become known as 'Crypto Winter,' the prosecutors wrote. "Kwon fled from the wreckage and, while in hiding, dissembled in interviews and tweets, blamed others for what had happened, and, once found, resisted extradition." "Kwon’s misconduct, the consequences of his crime, and his reaction to the discovery of his scheme all warrant a substantial prison term," they added. "Indeed, the circumstances of the offense, standing alone, would weigh strongly in favor of a maximum sentence." Prosecutors said in the filing that losses tied to the Terraform crash surpassed those caused by the collapse of Sam Bankman-Fried's FTX , Alex Mashinky's Celsius and OneCoin combined. Bankman-Fried is currently serving a 25-year prison sentence , while Mashinsky was sentenced to 12 years in prison for fraud. Terra-Luna crash The collapse of the Terraform ecosystem , which reached over $50 billion in market value at its peak, was a pivotal moment for the brutal crypto market downturn in 2022. At the center of the ecosystem was the algorithmic stablecoin UST, which was backed by a balancing mechanism linked to crypto token LUNA, instead of more tangible assets such as short-term U.S. Treasuries, like most current stablecoins. At the time, Kwon portrayed Terraform’s offerings as decentralized and technologically sound. However, the project relied on backdoor agreements, hidden trading activity and deceptive metrics to maintain its appearance of success, according to court filings. Kwon's sentencing will take place on December 11 in Manhattan federal court. Do Kwon Terraform Terra luna Southern district of new york More For You Protocol Research: GoPlus Security By CoinDesk Research Nov 14, 2025 Commissioned by GoPlus What to know : As of October 2025, GoPlus has generated $4.7M in total revenue across its product lines. The GoPlus App is the primary revenue driver, contributing $2.5M (approx. 53%), followed by the SafeToken Protocol at $1.7M. 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