Terra Case: Do Kwon Sentenced to 15 Years, Justice and Controversy After the $40 Billion Collapse

The 2022 Terra/Luna collapse dealt a heavy blow to the global cryptocurrency market, vaporizing over $40 billion in funds and leaving tens of thousands of investors with nothing. Now, Terraform Labs co-founder Do Kwon has finally been sentenced to 15 years in prison by a U.S. court. However, although this sentence is higher than the prosecution’s requested term, it still sparks debate within the crypto community: Is 15 years too lenient for such a massive financial disaster?

Do Kwon’s Two-Year Manhunt Ends with Conviction: US Court Sentences 15 Years

Inner City Press reports that on Thursday, U.S. District Court Judge Paul Engelmayer of the Southern District of New York announced that Do Kwon was convicted of wire fraud and conspiracy to commit fraud, and was sentenced to 15 years in prison, exceeding the 12-year sentence sought by prosecutors.

The judge pointed out that Kwon has a history of lying and long-term market deception. His false public statements over the past four years caused investors to become victims of fraud under unknown risks:

“The reason your actions are so despicable is because you exploited investors’ trust. If you hadn’t pleaded guilty, my sentence would have been even higher.”

According to reports, without a plea deal, Kwon faced a maximum sentence of 135 years. After pleading guilty, the maximum sentence was reduced to 25 years, and prosecutors also sought to recover $19 million in assets.

$40 Billion Stablecoin Collapse in a Night: Over 16,000 Victims Worldwide

This case originated from the complete collapse of Terra USD (UST) and its sister token LUNA in May 2022. UST, as an algorithmic stablecoin, relied on market mechanisms and LUNA’s anchoring to maintain its $1 value.

However, amid market panic and sell-offs, UST quickly de-pegged, causing LUNA’s price to plummet to zero. This death spiral ultimately led to approximately $40 billion in market value evaporating. The UST collapse also triggered a chain reaction, causing several crypto firms to go bankrupt.

(DeFi Stablecoins Past and Future: Written After Terra UST Collapse)

Bankruptcy documents confirmed that over 16,500 victims had been identified, not to mention countless others around the world who suffered losses and chose to take their own lives.

The Man Who Always Escapes: Montenegro Arrest, South Korea Re-Trial?

Kwon’s years of international flight have also attracted attention. In 2023, he was arrested in Montenegro for possessing a forged passport, and both the U.S. and South Korea requested his extradition. After months of legal battles, he was finally extradited to the U.S. for trial in December 2024.

However, the legal process is not yet complete. According to Coindesk, Kwon must serve at least half of his U.S. sentence, or 7.5 years, before he can apply for transfer back to South Korea. He still faces a maximum of 40 years in South Korea. In other words, his total sentence could far exceed the original U.S. sentence.

(Terra Case Update: Do Kwon Faces Cross-Border Sentencing, US Judge Worries Extradition to Korea Might Lead to Reduced Sentence or Release)

Community Concerns: Is a $40 Billion Disaster Only Worth 15 Years?

The verdict has also sparked heated debate in the crypto community. Crypto influencer Pix even compared Kwon’s sentence with several notorious financial fraudsters in history:

Former Nasdaq Chairman Bernie Madoff: Involved with $65 billion, sentenced to 150 years.

Former Stanford Financial Group CEO Allen Stanford: Involved with $70 billion, sentenced to 110 years.

Former US businessman Tom Petters: Involved with $3.7 billion, sentenced to 50 years.

Former law firm CEO Scott Rothstein: Involved with $1.2 billion, sentenced to 50 years.

Former music manager Lou Pearlman: Involved with $500 million, sentenced to 25 years.

At first glance, Kwon’s $40 billion scale for a 15-year sentence presents a stark contrast. Pix even jokingly asked, “He’ll be in his fifties when he gets out — is Terra 2.0 loading?” reflecting skepticism about the fairness of the sentence.

Looking Back at 2022: The Fall of Crypto Giants

Kwon has become the latest former crypto giant to be convicted recently, including:

FTX founder Sam Bankman-Fried (SBF) sentenced to 25 years

Celsius former CEO Alex Mashinsky sentenced to 12 years

Binance founder Zhao Changpeng (CZ) served 4 months, later pardoned by President Trump

Amid a series of legal cases, global regulators are stepping up efforts to establish order in the crypto industry. However, the market trauma caused by the Terra collapse and ongoing judicial discussions still cannot restore investor confidence or repair the damage done to the industry’s reputation.

This article on Terra case Do Kwon receiving a 15-year sentence and the justice and controversy after a $40 billion crash originally appeared on Chain News ABMedia.