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On April 5, 2024, a U.S. civil jury found Terraform Labs and its former CEO, Do Kwon, liable for defrauding investors in crypto asset securities. That verdict was separate from the court’s earlier finding of securities-registration violations and from Kwon’s later criminal case: he pleaded guilty in 2025 and received a 15-year prison sentence.
What the 2024 civil verdict found
The verdict followed a nine-day trial in the Securities and Exchange Commission’s case in the U.S. District Court for the Southern District of New York. The jury found Terraform and Kwon liable for defrauding investors in crypto asset securities. The SEC’s case concerned, among other things, representations about TerraUSD’s stability and claims about a payment application’s use of Terraform’s blockchain.
After the verdict, SEC Division of Enforcement Director Gurbir S. Grewal said the defendants “deceived investors about the stability of the crypto asset security and so-called algorithmic stablecoin Terra USD, and they further misled investors about whether a popular payment application used Terraform’s blockchain to process and settle payments.” That was Grewal’s description of the agency’s view of the case, not a quotation from the jury’s verdict form. The SEC said the deceptions wiped out tens of billions of dollars in market value nearly overnight.
The fraud verdict and registration ruling were distinct
The jury decided the fraud claims after trial. Separately, the court had already found that Terraform and Kwon unlawfully offered and sold crypto asset securities in violation of registration provisions. The registration finding was not another part of the jury’s April 2024 decision.
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What happened to TerraUSD and LUNA
TerraUSD (UST) was promoted as an algorithmic stablecoin, and LUNA was the associated crypto asset. Both collapsed in May 2022. The U.S. Department of Justice’s December 2025 sentencing release estimated investor losses from the collapse at more than $40 billion. DOJ separately said UST and LUNA had a combined apparent market value of more than $50 billion at their spring 2022 peak. Those figures describe different things: estimated losses are not the same as peak market value, the SEC’s civil judgment, or money already paid to investors.
How the civil and criminal cases differ
The SEC civil action and the federal criminal prosecution were separate legal tracks. The civil case produced investor-related remedies and a bankruptcy claims process; the criminal case produced a guilty plea, prison sentence, and a separate forfeiture and potential remission process.
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| Track | Finding or plea | Outcome and investor route |
|---|---|---|
| SEC civil action | April 5, 2024 jury verdict finding Terraform and Kwon liable for defrauding investors in crypto asset securities; the court had separately found registration violations. | The June 12, 2024 final consent judgment established civil monetary remedies and a conditional transfer to the Terraform bankruptcy estate. The bankruptcy process, not the verdict itself, is the route described for Terraform Crypto Loss Claims. |
| Federal criminal prosecution | Kwon pleaded guilty on August 12, 2025, to one conspiracy count involving commodities fraud, securities fraud, and wire fraud, plus one wire fraud count. | On December 11, 2025, he was sentenced to 15 years in prison and ordered to forfeit more than $19 million. Any DOJ remission process is separate from the Terraform bankruptcy matter. |
What the SEC judgment required—and what the amounts mean
The SEC investor-information page, last reviewed September 18, 2025, summarizes the June 12, 2024 final judgment as imposing $4,473,828,306 in disgorgement, prejudgment interest, and civil penalties on Terraform. The page also says Kwon must transfer at least $204,320,196 to the Terraform bankruptcy estate, subject to the judgment’s terms. The transfer includes cash, Luna Foundation Guard crypto assets, and PYTH tokens.
These are legal remedies and transfer obligations, not confirmation that the money or assets have been distributed to every investor. The DOJ’s separate estimate of more than $40 billion in investor losses is not the amount of the SEC judgment, and the criminal forfeiture is another distinct figure.
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Can Terraform investors still file a claim?
The SEC says the Terraform claims portal was the exclusive way to file Crypto Loss Claims and that the deadline, extended by the claims process, was May 16, 2025. That deadline has passed. The SEC’s investor page describes a liquidating trust and directs distribution questions to the Terraform bankruptcy process; the bankruptcy court approved a liquidating Chapter 11 plan on September 20, 2024.
The cited official information does not establish a current distribution ledger, payment status, or an individual investor’s recovery amount. Investors should consult the official Terraform Wind Down Trust or claims-administration information for case-specific updates rather than assume a claim can still be filed or that a particular recovery is due.
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What Kwon’s guilty plea and sentence mean
Kwon was extradited from Montenegro to the United States on December 31, 2024, according to DOJ. On August 12, 2025, he pleaded guilty to one count of conspiring to commit commodities fraud, securities fraud, and wire fraud, and one count of wire fraud. DOJ said the counts carried a combined statutory maximum of 25 years; that was the maximum available, not the sentence imposed. On December 11, 2025, DOJ announced a 15-year prison sentence and forfeiture of more than $19 million in proceeds.
DOJ describes a possible remission process for victims only after property has been finally forfeited, seized, and monetized. It is separate from Terraform’s bankruptcy distribution process. DOJ’s case and victim-information page, updated December 12, 2025, does not establish a payment schedule or an individual claimant’s eligibility, so consult that official page and its victim contact for current instructions.
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