Do Kwon Sentenced to 15 Years: $40 Billion TerraUSD–Luna Collapse Ruled Massive Fraud
Photo by Getty images
Source
bbc.com
Published
Dec 12, 2025
Category
Startups & Business
Executive summary
Do Kwon, one of the owners of the TerraUSD and Luna coins, was sentenced to 15 years in prison for fraud after causing a loss of $40 billion (£29.9 billion). He also pleaded guilty to bank fraud and conspiracy charges. He admitted to negotiating with a trading firm to artificially inflate the coin's value through unnatural means.
Analyst insight
UST was a stablecoin based entirely on algorithms, with no backing from any real assets. The system attempted to maintain price stability between Luna and UST through arbitrage. For this reason, many analysts had warned us that this was not a sustainable model. So the collapse was not actually a coincidence. Do Kwon's most critical mistake was hiding the truth. If he had made the necessary disclosure when UST lost its peg instead of making a deal with the trading firm, he would have avoided being labeled a “failed project” and arrested. The $40 billion loss went down in history as one of the biggest collapses in crypto history. The message this situation sends is that regulation is coming, there is no longer any tolerance for non-transparent projects, and the era of founders being “anonymous” is over.
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