Key Takeaways
- Do Kwon received a 15-year prison sentence for his role in the Luna and TerraUSD collapse.
- The implosion of the Terra ecosystem erased $40 billion in value and led to legal action across several countries.
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Do Kwon, co-founder of Terraform Labs and creator of TerraUSD and Luna, was sentenced to 15 years in federal prison on Thursday for fraud and conspiracy tied to the 2022 collapse that erased over $40B in crypto market value.
U.S. District Judge Paul Engelmayer handed down the sentence in New York, exceeding the 12-year term requested by prosecutors and far surpassing the 5 years sought by Kwon’s legal team. Kwon, 34, pleaded guilty in August to two counts, conspiracy to defraud and wire fraud, and admitted to making false statements about how TerraUSD regained its $1 peg.
Prosecutors said Kwon secretly arranged for a trading firm to buy millions of dollars’ worth of TerraUSD to artificially restore its price after it dropped below $1 in 2021, while publicly claiming an algorithm had done so.
The crash in May 2022 wiped out $40B in three days, triggering widespread contagion across the crypto industry. Kwon later settled with the SEC, agreeing to pay an $80M civil penalty and be permanently banned from crypto activity as part of a broader $4.55B settlement with Terraform Labs.
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