The biggest scandal in the crypto market: how the founder of Terra's case ended

Fren_Not_Food · 2026-01-13T08:18:26+00:00

The cryptocurrency market reacted severely to the New York court's sentencing of Do Kwon, who received 15 years for defrauding investors related to the Terra blockchain collapse. This led to losses of around $40 billion, highlighting the need for regulatory scrutiny in the crypto industry.

Fren_Not_Food

2026-01-13 08:18:26

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The cryptocurrency market trembled at the verdict handed down by a New York court. Do Kwon received a 15-year prison sentence for participating in a large-scale scheme to deceive investors. The court found that his actions led to the catastrophic collapse of the Terra blockchain and its associated stablecoin UST, resulting in investors losing approximately $40 billion.

Plea and Court Decision

On December 11, 2025, Do Kwon officially pleaded guilty to two charges related to Terra’s activities. Judge Paul Engelmayer described the incident as an “epic” financial scam, highlighting the unprecedented scale of losses for those affected.

Notably, the court rejected a plea agreement that would have resulted in a five-year sentence. This decision indicates the severity of the violations and the judicial system’s intention to give a fair assessment of the damage caused to investors.

Global Implications

The verdict in the US is only part of the legal story of Terra’s founder. South Korea has filed its own charges, which could result in Do Kwon facing up to an additional 40 years in prison on Terra-related charges. This approach demonstrates that the cryptocurrency industry is under increasing scrutiny from international authorities.

The case of Do Kwon serves as an important reminder of the need for thorough project vetting, deep analysis of the mechanisms behind new blockchain solutions, and heightened regulatory oversight of major crypto initiatives.

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