Do Kwon sentenced to 15 years in prison, why is it 10 years less than SBF? LUNA price soars 200% then pulls back

Terraform Labs co-founder Do Kwon was sentenced to 15 years in federal prison by a U.S. federal court for orchestrating a fraud scheme that caused $40 billion in losses. Despite causing nearly four times the financial damage of FTX founder SBF ($11 billion), his sentence is 10 years shorter. The key difference lies in Do Kwon’s guilty plea, apology to victims, and cooperative attitude during the trial, in stark contrast to SBF’s denial, evasion, and lack of remorse. Following the verdict, the LUNA token experienced extreme volatility, surging 200% before sharply retreating, highlighting market irrationality and speculative sentiment in response to extreme events.

Verdict Announced: The End of an “Algorithm Stablecoin Empire”

The ruling by the Southern District of New York marks a milestone in one of the most significant collapses in cryptocurrency history. On Thursday, U.S. District Judge Paul Engelmayer sentenced Terraform Labs co-founder Do Kwon to 15 years of federal incarceration. During the trial, the judge described the collapse of Terra and LUNA as “epic-scale, once-in-a-generation fraud,” explicitly noting that Do Kwon’s crimes caused “real people to lose $40 billion in real money, not just paper wealth,” with potentially millions of victims worldwide.

This sentence reflects the judge’s balancing of various factors. The prosecution’s recommended 12-year term was deemed “unreasonably lenient,” while the defense’s request for 5 years was called “completely unimaginable and extremely unreasonable.” Ultimately, the 15-year sentence considers the severity of the case and other factors like Do Kwon’s guilty plea. As part of the plea agreement, Do Kwon will forfeit assets exceeding $19.3 million. Previously, he reached a settlement with the U.S. Securities and Exchange Commission in 2024, agreeing to pay an $80 million fine and a lifetime ban from participating in cryptocurrency trading.

This ruling also signals a new phase in the U.S. judicial system’s crackdown on large-scale fraud in the crypto sector. Similar to the SBF case, it sends a clear message: regardless of how grand the project’s vision or how innovative the technology, crossing the line into investor fraud will result in severe legal consequences. Judge Engelmayer emphasized that Do Kwon’s actions “destroyed savings, businesses, and trust,” and therefore the punishment must “reflect the severity of the crime.”

Sentence Comparison: Why More Losses Lead to Shorter Prison Terms?

Do Kwon received a 15-year sentence, while SBF, responsible for approximately $11 billion in damages, was sentenced to 25 years. This notable disparity has sparked broad discussion among markets and legal experts. A deeper analysis shows that sentencing outcomes are not only based on the financial damages, but also closely related to the defendant’s courtroom strategy, remorse, and subsequent legal risks. Comparing the two provides a vivid “white-collar crime judicial practice lesson.”

The core difference first lies in “guilty plea” versus “full trial” choices. Do Kwon admitted to fraud charges as early as August 2025 and wrote to the court, “I alone take responsibility for everyone’s suffering. The community looked to me for guidance, but I led them astray out of arrogance.” This proactive acceptance of responsibility was considered a significant factor in reducing his sentence. Conversely, SBF chose to face the trial and maintained that FTX was merely experiencing a “liquidity crisis,” not fraud. He also was found to have committed perjury at least three times during his testimony, with his conduct described by the judge as “the most evasive testimony seen in nearly 30 years of judicial career.”

Second, there is a stark contrast in “remorse and subsequent attitude.” During the sentencing hearing, Do Kwon listened to victims’ statements and apologized directly to them. He stated, “Hearing the victims’ voices pains me and reminds me of the enormous damage I caused.” Judge Kaplan, in sentencing SBF, pointed out his “obvious lack of genuine remorse.” Moreover, SBF was found to have tried to interfere with witnesses before the trial. These behaviors intensified the judge’s assessment of his subjective malice, impacting his sentencing.

Key information comparison between Do Kwon and SBF

Finally, there is the consideration of “remaining legal risks.” Judge Engelmayer explicitly took into account that after serving time in the U.S., Do Kwon would be extradited to South Korea to face new charges. He could face up to 40 additional years in Korea. This means Do Kwon’s actual total sentence could far exceed 15 years. SBF, currently mainly facing U.S. legal sanctions, has his attorneys appealing, but no other serious charges in different jurisdictions are known. Therefore, U.S. courts did not need to “reserve” punishment for other legal domains in their sentencing.

Market Reaction: LUNA’s “Doomsday Carnival”

Contrasting sharply with the serious courtroom decision, the LUNA token’s price movement after the verdict was bizarre. Within 48 hours of the ruling, LUNA experienced a classic “bad news priced as good news” and “low liquidity short squeeze,” with its price skyrocketing from about $0.08 to over $0.24, a gain of more than 200%, before quickly falling back to around $0.17. This volatility was entirely driven by speculation unrelated to the project’s fundamentals, purely event-driven.

This price behavior exposes the market’s irrationality under certain conditions. First, the “sell the rumor, buy the fact” mentality played out vividly. Before the verdict, the market broadly expected a heavy sentence, and the negative sentiment had been partially priced in. When the 15-year sentence was announced—less than some expected—speculators interpreted it as “uncertainty cleared,” prompting them to buy and speculate. Second, LUNA’s extremely low liquidity amplified price swings. Small amounts of capital could trigger dramatic moves, leading to short squeezes and momentary upward spirals.

However, rational analysis indicates this ruling is fundamentally very negative for the Terra/LUNA ecosystem. It effectively sealed the coffin of the old Terra “zombie,” declaring there is no hope of revival. LUNA’s trading has entirely detached from its original value support and has become a pure speculative symbol. The current price fluctuations are merely a game of existing capital on the ruins, unrelated to project recovery or technical value. Investors must recognize that legal rulings do not change the asset’s inherent zero value; participating in such trades carries extremely high risk.

Industry Insights: Legal Red Lines and Future Compliance in Crypto

The two landmark cases of Do Kwon and SBF ring an unprecedented alarm for the entire crypto industry. They together outline a clear and insurmountable legal red line: whether a “algorithmic stablecoin” claiming “innovation” or a “industry benchmark” exchange, once involved in substantive investor deception, will face criminal prosecution equal to or harsher than traditional finance. This signifies that global regulators are entering a stage of mature and normalized enforcement against crypto misconduct.

The rulings also reveal that cooperation or resistance during investigations can lead to drastically different outcomes. Do Kwon’s case shows that admitting mistakes, expressing remorse, and cooperating with authorities, while not absolving guilt, can lead to materially lighter sentences. This provides a crucial practical reference for project teams or founders who might face similar dilemmas. The “wild west” era of the industry is ending—regulation, transparency, and integrity are now essential for survival and growth.

Looking ahead, such rulings will accelerate the integration of the crypto sector with mainstream financial rules. The sword of Damocles of regulation has been lowered, continuously squeezing the space for fraud and misconduct, and channeling resources toward genuinely valuable, compliant projects. For investors, this means paying more attention to projects’ legal structures, transparency, and founders’ backgrounds and credibility. Projects that can clearly articulate their business models and proactively embrace compliance frameworks are more likely to survive cycles and earn long-term trust.