Terra / LUNA / UST collapse
The algorithmic stablecoin TerraUSD (UST) lost its dollar peg in May 2022 and, with its sister token LUNA, collapsed. The SEC and DOJ cited about $40 billion in investor losses; co-founder Do Kwon was sentenced to 15 years.
Also known as: Terra, Terraform Labs, Do Kwon, LUNA, TerraUSD, UST, Anchor Protocol
Summary
TerraUSD (UST) was an algorithmic stablecoin that, together with its sister token LUNA, lost value rapidly in May 2022 after UST de-pegged from the U.S. dollar. The SEC and DOJ stated the collapse wiped out roughly $40 billion in market value. [1][2]
Allegations
The SEC charged Terraform Labs and co-founder Do Kwon with securities fraud, alleging they misled investors about UST's stability and about the use of the Terra blockchain, and that UST had been "secretly" manipulated to restore its peg during an earlier 2021 wobble. [2][3] A jury found Terraform and Kwon liable for securities fraud in April 2024, and they agreed to pay more than $4.5 billion. [2]
Outcome
Do Kwon was extradited to the United States, pleaded guilty, and in December 2025 was sentenced to 15 years in prison and ordered to forfeit over $19 million. [1]
Bracketed numbers refer to the numbered sources listed below.
People & entities involved
- Do KwonCo-founder & CEOIndividualsCo-founder of Terraform Labs, which created the TerraUSD (UST) stablecoin and LUNA. Pleaded guilty to U.S. fraud charges and was sentenced in December 2025 to 15 years in prison.
- Daniel ShinCo-founderIndividualsCo-founder of Terraform Labs (with Do Kwon) and founder of the Chai payments platform. South Korean prosecutors indicted him in 2023 over the Terra/LUNA collapse (fraud, embezzlement, Capital Markets Act violations); he denies wrongdoing and his trial remains ongoing.
Sources (3)
See also
- Bitcoin Latinum (LTNM)TokensA ~$16M token offering (SAFTs for 'Bitcoin Latinum' / LTNM) that the SEC charged in 2026 as fraud: founder Donald Basile falsely called LTNM 'the world's first insured digital asset' backed by an 'existing trust,' neither of which existed, and diverted investor funds for personal use (including a $160,000 horse).
- Loci (LOCIcoin)TokensA 2017–2018 ICO for 'LOCIcoin' tied to the InnVenn IP-search platform. The SEC charged Loci and CEO John Wise with fraud for raising $7.6M on false claims about revenue, headcount, and user base; Wise also misused investor funds. Settled with a $7.6M penalty and an officer/director bar.
- Blockchain Terminal (BCT)Tokens
This page was last updated on Jun 8, 2026. View revision history.