Do Kwon Sentencing: Prosecutors Seek 12 Years for $40 Billion Terra Collapse
TLDR
- Federal prosecutors are seeking a 12-year prison sentence for Do Kwon over the $40 billion Terra/Luna collapse in 2022
- Kwon pleaded guilty in August to conspiracy and wire fraud charges, with his defense team requesting only five years
- Prosecutors say Kwon concealed Jump Trading’s secret role in propping up TerraUSD during a 2021 depeg event
- Kwon spent nearly three years detained in Montenegro before being extradited to the United States in January
- Sentencing is scheduled for December 11, and Kwon still faces a potential 40-year sentence in South Korea
Federal prosecutors have asked a US court to sentence Do Kwon to 12 years in prison for his role in the Terra cryptocurrency collapse. The Terraform Labs co-founder faces sentencing on December 11 before US District Judge Paul Engelmayer.
The government filed its sentencing memorandum on Thursday. Prosecutors described Kwon’s crimes as “colossal in scope” and pointed to the $40 billion loss suffered by investors. They argued that the collapse triggered chain reactions across crypto markets that contributed to other failures, including FTX.
Kwon pleaded guilty in August to conspiracy and wire fraud charges. His legal team is asking for just five years in prison. The 34-year-old South Korean entrepreneur admitted he knowingly participated in a scheme to defraud cryptocurrency buyers between 2018 and 2022.
The case centers on TerraUSD, an algorithmic stablecoin designed to maintain a one-dollar peg. The entire Terra ecosystem collapsed in May 2022. TerraUSD fell to pennies while its sister token Luna dropped from $116 to near zero.
What Kwon Admitted to in Court
Kwon admitted making false statements about how TerraUSD’s peg restoration mechanisms worked. He also concealed Jump Trading’s secret role in stabilizing the stablecoin during a May 2021 depeg event. That earlier incident foreshadowed the larger collapse one year later.
Prosecutors said Kwon’s fraudulent statements to customers set off cascading failures across cryptocurrency markets. The Justice Department emphasized that the damage extended beyond Terra’s immediate investor losses. The collapse contributed to broader market turmoil that affected multiple platforms and billions in additional value.
Defense Points to Montenegro Detention
Kwon’s lawyers argue that his time in Montenegro detention should count heavily toward his sentence. They describe the conditions as brutal and note he spent nearly three years there. His defense team says additional prison time is unnecessary given what he already endured during foreign detention.
The plea deal requires Kwon to forfeit over $19 million and multiple properties. His lawyers also point out that he faces trial in South Korea for the same conduct. South Korean prosecutors are seeking a 40-year prison term there.
Prosecutors are not pursuing restitution from the millions of affected investors. They cited the complexity of calculating individual losses across global markets. US authorities said they would support Kwon serving the second half of his sentence in South Korea if he complies with plea terms.
The statutory maximum for Kwon’s charges reaches 25 years. His plea agreement caps prosecutorial recommendations at 12 years. Judge Engelmayer is known for strict handling of financial fraud cases.
Kwon was arrested in Montenegro in March 2023 while traveling with a fake passport. He spent nearly two years fighting extradition before being sent to the United States in January. The case became one of the most watched legal battles in cryptocurrency history.
The post Do Kwon Sentencing: Prosecutors Seek 12 Years for $40 Billion Terra Collapse appeared first on CoinCentral.
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