Michaela
U.S. federal prosecutors have called for a 12-year prison term for Terraform Labs co-founder Do Kwon, citing his role in the TerraUSD collapse that has wiped out $40 billion and caused widespread market disruptions.
Key Points
- U.S. prosecutors call for a 12-year term for Kwon over the $40B TerraUSD collapse and market fallout.
- Kwon admitted fraud, false statements, and hiding third-party support for TerraUSD.
- His legal team cites harsh detention abroad and a separate South Korean trial in arguing for a lighter sentence.
According to a report by Bloomberg, in a Thursday filing, U.S. prosecutors told District Judge Paul Engelmayer that Kwon’s offenses were “colossal in scope,” noting how his actions triggered widespread market failures that played a role in FTX’s collapse.
Prosecutors specifically noted that the Terra collapse helped set the stage for FTX’s downfall, demonstrating broader systemic risks extending beyond losses to Terra investors. In court, Kwon admitted that from 2018 to 2022, he “knowingly agreed to participate in a scheme to defraud purchasers of cryptocurrencies” through Terraform Labs.
Kwon also acknowledged providing false statements about TerraUSD’s peg restoration and hiding Jump Trading’s secret involvement in supporting the stablecoin during a May 2021 depeg, a precursor to the larger collapse.
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Kwon is scheduled to be sentenced on December 11, with his legal team seeking a five-year term. In August, he pleaded guilty to conspiracy and wire fraud charges under a deal that limits prosecutorial recommendations to 12 years. His attorneys contend that nearly three years spent in what they describe as “harsh conditions in Montenegro” should be considered a significant factor in determining his sentence.
Furthermore, Kwon’s attorneys argue that additional imprisonment would be excessive, given the significant punishment he has already endured during his extended detention abroad. They also note that he faces a separate trial in South Korea for the same conduct, where prosecutors are seeking a 40-year sentence, a factor they say should be considered in the U.S. proceedings.
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U.S. authorities have indicated they may allow Kwon to serve the second half of his sentence in South Korea if he meets the conditions of his plea agreement and qualifies under international transfer programs.
Kwon’s sentencing will mark a pivotal moment in the ongoing scrutiny of crypto industry accountability, signaling how courts may weigh international detention, cooperation, and cross-border legal obligations in high-profile cryptocurrency fraud cases.
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MICHAELA
Michaela is a news writer focused on cryptocurrency and blockchain topics. She prioritizes rigorous research and accuracy to uncover interesting angles and ensure engaging reporting. A lifelong book lover, she applies her passion for reading to deeply explore the constantly evolving crypto world.
