The co-founder of Terraform was sentenced to 15 years in prison after pleading guilty

The federal judge listened to the statements of several victims of Terraform Labs and Do Kwon for several hours, before deciding on the sentence for this co-founder. Do Kwon, the co-founder of Terraform Labs, was convicted of telecommunications fraud and conspiracy to commit fraud, and was sentenced to 15 years in prison.

During the hearing held on Thursday in the United States District Court for the Southern District of New York, Judge Paul Engelmayer ordered that Do Kwon be sentenced to 15 years in prison for his role in the Terraform collapse. This incident caused the value of the cryptocurrency market to decrease by approximately $40 billion in 2022. Do Kwon will serve his sentence in the United States, with 17 months of time served being credited towards his sentence.

Before making the sentencing decision, Engelmayer heard testimony from some of the victims of Terraform Labs. He also questioned what kind of legal proceedings might be faced by Do Kwon in his homeland, South Korea, as Korean authorities have also filed charges against him.

According to reports from Neighborhood News, Do Kwon said before the verdict: “I want to let everyone know that I have been thinking about what I could have done, and what I can still do. Four years have passed since the car accident, and I haven’t seen my family for three years. I want to atone for my sins in my homeland.”

It is reported that Engelmayer stated that the request made by the US prosecutors for a 12-year sentence was “unreasonable,” while the lawyer of Do Kwon argued that a 5-year sentence was “far from reasonable, and should be overturned through appeal.”

According to the Naechim News, Judge Engelmeyer said to Do Kwon, “If you are found guilty of fraud, you will lose your freedom for a long time. You have become addicted to cryptocurrencies, and I believe that has not changed. You must have lost your capacity to act responsibly. If you hadn’t pleaded guilty, my sentence would have been much heavier.” Judge Engelmeyer also added to Ms. Kwon, “Your fraud was extremely serious. You deceived the market for four years… Investors took risks at their own discretion. But the risks they took weren’t ones of becoming victims of fraud… Your actions were despicable because you exploited people’s trust.” After serving seven and a half years in prison, Do Kwon may be extradited back to Korea, where he can serve the remainder of his sentence in the United States. He could face up to 40 years of imprisonment in Korea. During the sentencing process, victims can express their opinions. The prosecutor stated during the sentencing hearing that, based on the ongoing bankruptcy proceedings of Terraform Inc., approximately 16,500 people were affected by its collapse. Before Judge Engelmeyer made his decision, six people were allowed to speak to the court via phone, describing the financial losses they suffered due to Terraform Inc.According to the Nekrasa News, one of the victims, Tatiana Donzova, said, “I sold my apartment in Moscow and invested the money in Ducun. I moved to Tbilisi. $81,000 turned into just $13 at the moment. Ducun launched a project called Luna 2, which was later renamed LUNC. He showed no sense of responsibility towards investors. Now, I truly have no home to call my own.”

It is reported that Kwon, who is suspected of being involved in the collapse of the Earth’s ecosystem in 2022, was transferred to American authorities in December 2024 after being extradited to Montenegro. His legal team made various objections in the Montenegrin courts, delaying the trial process for several months.

Since Kwon is expected to serve many years in prison, this co-founder of Terraform becomes one of the latest former prominent cryptocurrency executives to reach a plea agreement or be convicted in American courts.

Sam Bankman-Fried, former CEO of FTX, was sentenced to 25 years in prison. Zhao Changpeng, former CEO of Binance, served four months in prison (though later received parole from U.S. President Donald Trump). Alex Mashinsky, former CEO of Celsius, was sentenced to 12 years in prison.