Do Kwon pleads guilty to 12 years in prison and $19.2 million fine

Sentence for LUNA founder

Do Hyeong Kwon, also known as Do Kwon, is the founder and former CEO of Terraform Labs, a Singapore-based blockchain company known for developing Luna and the TerraUSD (UST) cryptocurrency. Millions of investors globally suffered severe losses due to the $40 billion collapse of the Terra ecosystem in May 2022, which led to Kwon being placed under legal investigation. After Kwon was extradited from Montenegro in late 2024, the Southern District of New York played a key role in his prosecution.

On August 12, 2025, Kwon changed his plea from not guilty to guilty on two main charges: conspiracy to commit fraud involving commodities, securities, and wire fraud, and wire fraud. Provided Kwon accepts responsibility and does not reoffend during the trial, the deal with the Manhattan District Attorney’s office includes a maximum prison sentence of 12 years—significantly lower than the maximum penalty of 25 years. He must also pay a $19.2 million fine, which he allegedly obtained through illegal activities, such as accepting profits from Terraform Labs and similar cryptocurrencies.

After being extradited from Montenegro—where he was arrested in March 2023 for using a fake passport and facing months of litigation—Kwon has been under a great deal of pressure. Prosecutors allege that he intentionally misrepresented the stability of TerraUSD, including concealing the role of a high-frequency trading firm in maintaining the stablecoin’s artificial value. The value of Luna and the entire ecosystem collapsed after UST fell below $1 in 2022, resulting in a massive loss. After serving half of his sentence, a final decision will be made on December 11, 2025. Details on sentence length and international transfer are still being worked out.

Global shock event

Do Kwon's original plea change from "not guilty" to "guilty" on two counts of conspiracy to commit wire fraud and wire fraud was a significant turning point that ended more than two years of legal wrangling since Do Kwon was arrested in Montenegro. The decision came after Kwon was extradited to the United States on December 31, 2024, facing an initial indictment on nine counts, including securities fraud and money laundering. The plea agreement, with a recommended sentence of 12 years (rather than 25 years if the full indictment were considered), showed Kwon's efforts to cooperate with prosecutors to reduce his sentence.

Terraform Labs collapsed after UST and Luna lost value; this event reinforced the conclusion that the company's operations, under Kwon's leadership, contained serious wrongdoing. Kwon admitted to acts that caused damage to millions of investors, including providing misleading information about the stability of UST and using a high-frequency trading firm to pump the token price.

Conclusion and evaluation

Do Kwon’s guilty plea to conspiracy to commit wire fraud and wire fraud in a U.S. court is a milestone that reflects the government’s efforts to bring justice to major cryptocurrency scams. The event brings legal clarity to investors, while leaving behind many lessons and challenges for the blockchain industry.

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