Do Kwon Sentenced to 15 Years for Terra Fraud: LUNA and LUNC Tokens Crash Over 20%

Source: CoinEdition Original Title: Do Kwon Handed 15-Year Sentence: Terra Tokens Crash 20% upon Verdict Original Link:

Overview

Key Points:

• Terraform Labs founder Do Kwon received a 15-year prison term, exceeding the 12 years requested by prosecutors, for the $40 billion collapse.
• The verdict triggered a massive selloff in Terra (LUNA) and Terra Classic (LUNC), causing both to plunge over 21% as speculative hope evaporated.
• Kwon was ordered to forfeit $19 million in illicit proceeds, a fraction of the billions lost by over 1 million investors.

Sentence Details

Do Kwon, the architect of the $40 billion Terra-Luna collapse that precipitated the 2022 crypto winter, has been sentenced to 15 years in federal prison. The sentence, handed down on Thursday by U.S. District Judge Paul Engelmayer, is notably harsher than the 12-year term requested by prosecutors, signaling a zero-tolerance stance on algorithmic stablecoin fraud.

This judgment places Kwon alongside FTX founder Sam Bankman-Fried in the growing roster of crypto executives facing decade-long incarcerations.

In addition to the prison term, Kwon was ordered to forfeit over $19 million in proceeds derived from wire fraud and securities manipulation schemes involving Terraform Labs.

Prosecution and Plea

On Thursday, December 11, 2025, the United States Attorney for the Southern District of New York announced that Kwon will serve 15 years in prison. According to the announcement, Kwon was sentenced for committing wire fraud and conspiring to commit securities and commodities fraud through Terraform Labs.

The prosecutor had previously requested the court to sentence Kwon to 12 years. In contrast, Kwon’s attorneys had requested Judge Engelmayer not to impose a sentence of more than 5 years.

In mid-August this year, Kwon pleaded guilty to counts before the U.S. District Judge Paul Engelmayer. As such, Kwon was ordered to forfeit more than $19 million in proceeds from his illegal activities including his interest in Terraform and its crypto assets.

The proceeds are likely to be returned to the more than 1 million distressed Terra Luna users. Moreover, Terraform Labs reached a $4.47 billion settlement deal with the United States Securities and Exchange Commission (SEC) in June 2024.

However, the funds collected may not make Terra Luna investors whole again as the collapse involved more than $40 billion.

“Do Kwon devised elaborate schemes to mislead investors and inflate the value of Terraform’s cryptocurrencies for his own benefit,” noted the U.S. Attorney.

Market Impact: LUNC and LUNA Price Crash

Following the 15-year sentencing of Kwon, crypto projects developed to replace initial tokens experienced a significant selloff.

LUNA Performance: Terra LUNA, which has a fully diluted valuation of about $191 million, dropped more than 28% during the past 24 hours to trade at about $0.16 at press time. The LUNA price has now dropped over 99% since its inception.

LUNC Performance: Terra Classic (LUNC) dropped over 26% in the past 24 hours to trade about $0.0000458 at press time. Consequently, the small-cap altcoin has dumped over 99.9% of its value from its peak.

USTC Stablecoin Impact: The TerraClassicUSD (USTC), the algorithmic stablecoin that collapsed during the 2022 event, dropped over 24% in the last 24 hours to trade at about $0.008268 at press time.

The sentencing of Kwon may heavily impact the trading of these tokens on centralized exchanges, whereby potential delisting on major platforms may occur.