- 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.
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.
Related: US Prosecutors Push for 12-Year Sentence as Do Kwon’s Terra Case Nears Final Judgment
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.
Do Kwon Gets 15 Years in Prison for Fraud and Manipulation
On Thursday, December 11, 2025, the United States Attorney for the Southern District of New York, Jay Clayton, 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. On the other hand, the attorneys representing Kwon 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 it 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,” Clayton noted.
LUNC and LUNA Prices Dump Over 21%
Following the 15-year sentencing of Kwon in the United States, crypto projects developed to replace initial tokens experienced a significant selloff. For instance, 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.
As such, the LUNA price has now dropped over 99% since its inception. Similarly, 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 value.
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 CEXes led by Binance and Bybit may happen.
Related: Terra Classic (LUNC) Price Prediction: Market Reactions Strengthen as Key Levels Face Renewed Pressure
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Source: https://coinedition.com/do-kwon-handed-15-year-sentence-terra-tokens-crash-20-upon-verdict/
