Light Penalty for the 40 Billion Collapse: Why Do Kwon took Less than SBF

The former co-founder of Terraform Labs, Do Kwon, was sentenced Thursday to 15 years in federal prison for orchestrating a $40 billion cryptocurrency fraud.

The sentence, handed down by U.S. District Judge Paul Engelmayer, was considerably milder than the 25 years handed down to former FTX CEO Sam Bankman-Fried (SBF) last year, despite Kwon's fraud having caused nearly four times the financial damage.

Judge Engelmayer, presiding over the case in the Southern District of New York, described the Terra-Luna collapse as a "fraud on an epic, generational scale," but still opted for a lower sentence than SBF.

The disparity highlights how factors such as courtroom behaviour, remorse and cooperation with authorities can dramatically affect the outcome in high-profile white-collar crime cases.

Pentance Vs. Perjury

The key factor that differentiated the sentences was the conduct of the two defendants. Do Kwon pleaded guilty in August 2025 to conspiracy and wire fraud, accepting responsibility for misleading investors about TerraUSD's stability mechanisms.

In a letter to the court, he wrote: 'I am solely responsible for everyone's pain. The community looked to me for the way forward, and I, in my arrogance, led it astray'. Kwon also listened directly to the victims' statements, apologising in the courtroom.

SBF, on the other hand, went to trial and maintained its innocence, claiming that FTX was facing a mere 'liquidity crisis'. Judge Lewis Kaplan sentenced SBF to 25 years for the $11 billion fraud, citing its "exceptional flexibility with the truth" and "apparent lack of any real remorse." Kaplan even found that SBF had committed perjury at least three times during his testimony and had attempted to tamper with witnesses.

Future Legal Risk

Another critical element in Kwon's case is his upcoming prosecution in South Korea, where he faces charges that could lead to a further sentence of up to 40 years.

Judge Engelmayer explicitly took this perspective into account when setting the US sentence. Kwon is likely to be extradited to his home country after serving his sentence in the US. SBF does not face a similar foreign legal risk.

Kwon agreed to forfeit $19.3 million as part of the plea deal and was also ordered to pay an $80 million fine and receive a lifetime ban on cryptocurrency transactions.

The sentences send a clear message to the industry: cooperation and genuine remorse can significantly reduce jail time.