Terraform Founder Do Kwon Faces Prison Sentences in Two Countries

TLDR

• US District Judge Paul Engelmayer asked prosecutors and defense attorneys to clarify charges and potential sentences Do Kwon faces in South Korea before his Thursday sentencing hearing.
• Kwon pleaded guilty in August to wire fraud and conspiracy to defraud, with prosecutors seeking at least 12 years while defense wants no more than five years.
• The judge questioned whether Kwon’s four-month detention in Montenegro for falsified travel documents would count toward his US sentence.
• Kwon’s lawyers said he could face up to 40 years in prison in South Korea, where authorities issued an arrest warrant in 2022.
• Judge Engelmayer expressed concern that South Korea might release Kwon early if he serves the latter part of his sentence there.

US District Judge Paul Engelmayer requested information about charges awaiting Terraform Labs co-founder Do Kwon in South Korea ahead of his scheduled sentencing on Thursday. The judge asked both prosecutors and defense attorneys to provide details about the maximum and minimum sentences Kwon could face if extradited to his home country.

Kwon pleaded guilty in August to two felony counts of wire fraud and conspiracy to defraud. The charges relate to his role in the 2022 collapse of Terraform Labs and its Terra ecosystem.

Questions About Montenegro Detention

In a Monday filing, Judge Engelmayer asked whether both sides agreed that none of Kwon’s time in custody in Montenegro would be credited toward any US sentence. Kwon served four months in Montenegro for using falsified travel documents.

He spent more than a year in the country fighting extradition requests from both the United States and South Korea. Montenegro held competing extradition applications from both countries during Kwon’s detention.

The judge’s questions show concern about how different jurisdictions will handle Kwon’s custody time. He specifically asked about the possibility of South Korea releasing Kwon early if he serves the back half of his sentence there.

Do Kwon was arrested in Montenegro in 2023 after attempting to travel with falsified documents. He was eventually extradited to the United States to face charges related to Terraform’s collapse.

Sentencing Recommendations Differ

Defense attorneys requested that Kwon serve no more than five years in US prison. Prosecutors are pushing for at least 12 years behind bars.

The US government’s sentencing recommendation stated that Kwon caused losses that eclipsed those caused by three other crypto figures combined. Those figures are former FTX CEO Sam Bankman-Fried, former Celsius CEO Alex Mashinsky, and OneCoin’s Karl Sebastian Greenwood.

All three men are currently serving multi-year sentences in federal prison. Prosecutors used this comparison to argue for a lengthy sentence for Kwon.

South Korea Charges Pending

Kwon’s lawyers told the court that even if Judge Engelmayer sentences him to time served, he would immediately reenter pretrial detention in South Korea. They said he could face up to 40 years in prison in South Korea, where he holds citizenship.

South Korean authorities issued an arrest warrant for Kwon in 2022. The country has not had him in custody since the Terra ecosystem collapsed.

South Korean prosecutors applied to extradite Kwon from Montenegro at the same time as US authorities. They have been pursuing cases against individuals tied to Terraform Labs.

Kwon disappeared after Terra’s collapse in 2022. His whereabouts were unknown until his arrest in Montenegro in 2023.

The US indicted Kwon in March 2023 for his role at Terraform Labs. He was extradited to the United States after Montenegro resolved the competing extradition requests.

Thursday’s sentencing hearing will determine how much time Kwon serves in the United States before any potential extradition to South Korea.

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