Do Kwon, co-founder of Terraform Labs, pleaded guilty to conspiracy to defraud and wire fraud tied to the collapse of stablecoin TerraUSD and token Luna. Prosecutors say the scheme helped trigger roughly $40 billion in market losses and asked for at least a 12-year sentence at a Dec. 11 federal hearing in New York.

Prosecutors in Manhattan presented sentencing memoranda and victim-impact evidence at a December 11 federal hearing after Do Kwon admitted guilt to conspiracy to defraud and wire fraud for misleading investors about the stability of TerraUSD and the linked Luna token. Authorities contend misleading claims and coordinated actions around the stablecoin design materially misled market participants and contributed to cascading losses estimated at about $40 billion across crypto markets. The government urged a custodial term of at least 12 years, citing the scale of investor harm and the need for deterrence; Kwon's defense sought a substantially lighter sentence, noting cooperation and other mitigating factors. The hearing addressed restitution, asset forfeiture and the application of federal fraud guidelines. Legal observers said the case underscores regulators' and prosecutors' increased willingness to pursue criminal accountability for major crypto collapses, and the sentence will be watched for its potential influence on enforcement strategies and investor protections in digital asset markets.