Terraform Labs founder Do Kwon should serve at least 12 years behind bars for his role in the spectacular $40 billion implosion of the Terra ecosystem, U.S. federal prosecutors said on Thursday.
While Kwon’s team recently requested a 5-year sentence, U.S. officials contended that the massive scope of his crimes cries out for this lengthy prison sentence to discourage any future similar behavior.
Prosecutors Seek Maximum 12-Year Sentence For Kwon
Though Do Kwon faced up to 25 years in federal prison for his crimes, prosecutors agreed in August that they would push for up to 12 years as part of a plea deal reached with the ex-crypto mogul, where he pleaded guilty to conspiracy to commit fraud and wire fraud.
In a sentencing submission filed on Thursday to the U.S. District Judge Paul Engelmayer for the Southern District of New York, DOJ attorneys argued that Kwon deserves a harsh sentence to avoid “unwarranted sentencing disparities” with other, similar cases — namely, that of FTX founder Sam Bankman-Fried.
In a 2023 jury trial, Bankman-Fried was convicted on seven counts of fraud and conspiracy for his role in the collapse of his $32 billion crypto empire. A judge later sentenced the former billionaire crypto wunderkind to 25 years in prison.
“Judge Kaplan imposed a sentence of 25 years on Bankman-Fried, who, like Kwon, perpetrated a fraud of staggering proportions in his twenties and then attributed his brazen criminal conduct in part to youth and inexperience,” the prosecutors postulated.
The prosecutors also slammed Kwon’s legal team for claiming the Terra founder should receive a “far shorter sentence” than Celsius founder Alex Mashinsky, who was sentenced to 12 years in prison earlier this year for multi-billion-dollar fraud.
The Terra-Luna Implosion
Kwon, a 34-year-old South Korean citizen, found himself at the heart of a global financial implosion in 2022 when two cryptocurrencies he created, the algorithmic stablecoin UST and its sister token Luna, quickly crashed to zero, wiping out over $40 billion in investor money and triggering a cascading crisis in the cryptocurrency market.
The resulting contagion event led to the downfall of several crypto entities in 2022, including FTX. Prosecutors claim Kwon misled investors about the risks and stability associated with the tokens.
“Kwon deprived UST and Terra purchasers of the ability to make fully informed decisions about their purchases, and artificially inflated the value of Terraform’s cryptocurrencies, which directly enriched and raised Kwon’s profile,” they wrote in the filing.
The former Terraform boss fled the chaos, only to be arrested in Montenegro in 2023 while attempting to fly to Dubai with a forged passport. He was deported to New York earlier this year after an extremely lengthy jurisdictional contest.
“Kwon’s misconduct, the consequences of his crime, and his reaction to the discovery of his scheme all warrant a substantial prison term,” prosecutors noted. “Indeed, the circumstances of the offense, standing alone, would weigh strongly in favor of a maximum sentence.”
Kwon will be sentenced in Manhattan on December 11.
Source: https://zycrypto.com/do-kwon-deserves-12-year-prison-sentence-for-his-role-in-40b-terra-luna-crash-us-prosecutors-say/
