Do Kwon, the founder of the failed Terra/Luna ecosystem, was sentenced to 15 years in prison for cryptocurrency fraud that led to losses estimated at around $40 billion. His story is a combination of technological ambition, extreme self-confidence, and a lengthy run from law enforcement, culminating in a federal court in the United States.
Arrest and international pursuit
Kwon was arrested on March 23, 2023, in Podgorica, Montenegro, while attempting to fly to Dubai using fake IDs. Following the spectacular crash of TerraUSD and the LUNA token in May 2022, which sparked a global crisis of confidence in the cryptocurrency market, Kwon became the subject of an international Interpol arrest warrant.
He remained in hiding for many months, moving between Asian and European countries. Following his arrest, both the United States and South Korea filed extradition requests. Ultimately, after more than two years of proceedings and time in Montenegrin custody, his extradition to the US was approved in late 2024.
Charges and plea deal
After being brought to the United States, Do Kwon was charged with nine federal counts, including securities fraud, wire fraud, market manipulation, and money laundering. He faced a combined prison sentence of up to 135 years.
The prosecutor's office accused him, in particular, of misleading investors about the stability of TerraUSD, an algorithmic "stablecoin" whose exchange rate, contrary to public declarations, was allegedly artificially maintained through secret transactions with an external trading company.
In August 2025, Kwon reached a plea agreement with prosecutors, pleading guilty to two key charges: conspiracy to commit fraud and telecommunications fraud, thereby avoiding a full trial.
Trial and verdict
The trial was initially scheduled for early 2026, but the conclusion of a plea agreement significantly expedited the proceedings. On December 11, 2025, in the U.S. District Court for the Southern District of New York, Judge Paul A. Engelmayer announced the verdict.
In a letter to the court, Do Kwon apologized to the victims and admitted full responsibility for one of the largest crashes in cryptocurrency market history, which was larger in terms of losses than the FTX collapse or the OneCoin scandal. He also agreed to forfeit approximately $19 million and other assets.
The court rejected the defense's request for a five-year prison sentence to be served in South Korea, citing the enormous scale of the damage and the number of victims worldwide. Ultimately, Kwon was sentenced to 15 years in prison.
Consequences for the cryptocurrency market
The Do Kwon verdict is widely seen as a symbolic end to the era of impunity for so-called "crypto kings." Losses resulting from the Terra/Luna collapse, estimated at $40-60 billion, triggered a domino effect, contributing to the bankruptcy of numerous cryptocurrency companies.
The time spent in detention in Montenegro (approximately 17 months) will be credited towards his sentence. After serving at least half of his sentence, he may be transferred to South Korea, where he may still face further criminal proceedings.
For investors, the case paves the way for further civil claims, and for the technology market, it sends a clear signal that financial innovations do not operate outside the framework of the law.
This article is for informational purposes only and does not constitute legal advice.
The law is current as of January 8 , 2025.
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