Terraform: 15 years in prison for Do Kwon, found guilty of massive fraud

The collapse of Terraform Labs and the sentencing of its co-founder, Do Kwon, to 15 years in prison mark a turning point in the crypto world. Between massive fraud, ruined victims, and increased regulation, this case raises the question: are the sector’s actors finally held accountable for their actions?

Crypto: 15 years in prison for the co-founder of Terraform

Do Kwon, co-founder of Terraform Labs, was sentenced to 15 years in prison for fraud after the collapse of his crypto ecosystem in 2022. The American court qualified the actions as generational fraud, highlighting the $40 billion losses suffered by investors. Kwon pleaded guilty to conspiracy and wire fraud, sealing his fate.

Victims, some of whom lost their savings, testified to the devastating impact of this case. The judge emphasized the need to send a clear message: fraudsters will not go unpunished. This conviction comes after months of investigation and legal procedures, marking a key step in crypto regulation.

For observers, this harsh sentence from the judges could deter other players in the crypto sector from engaging in fraudulent practices. It also reminds us that, despite technological innovation, traditional financial rules apply.

Sam Bankman-Fried and Do Kwon: same fate, same mistakes?

The sentencing of Do Kwon to 15 years in prison recalls that of Sam Bankman-Fried, founder of FTX, jailed for 25 years in 2024. The two cases share striking similarities:

• Unkept promises;
• Fraudulent use of client funds;
• Spectacular collapse of their platforms. 

These sentences show a clear trend: American authorities no longer tolerate abuses in crypto.

Bankman-Fried, like Kwon, built an empire on fragile foundations, exploiting investors’ trust without real transparency. Their respective falls revealed sophisticated fraud schemes, but also a total lack of initial remorse. Judges in both cases emphasized the need for exemplary sentences to protect markets. Are we witnessing the end of impunity for the kings of crypto? Or do these cases remain exceptions in a still largely deregulated sector? 

Which crypto could be the next victim of this regulatory tightening?

In this context of increased regulation, stablecoins like Tether (USDT) are under scrutiny. Their model, based on sometimes opaque reserves, recalls TerraUSD’s unkept promises. Authorities could target these assets, whose stability is crucial for the crypto ecosystem. Tether, with its $80 billion capitalization, is often criticized for its lack of transparency.

If regulators proved that its reserves are insufficient or manipulated, a crisis of confidence could occur, leading to a collapse similar to Terra’s. Other projects like Circle (USDC) could also suffer. Experts emphasize that stablecoins are systemic, and their downfall would have repercussions across the entire crypto market. Investors must therefore remain vigilant, while crypto projects must anticipate stricter audits.

The sentencing of Do Kwon and that of Sam Bankman-Fried send a strong message: crypto is no longer a lawless zone. But will this rigor be enough to restore trust? The debate remains open, between necessary regulation and innovation to preserve. One thing is certain, the era of impunity seems over.