US attorneys representing the federal government have requested that a judge send Terraform Labs co-founder Do Kwon to prison for 12 years at his sentencing hearing next week.
In a Thursday filing in the US District Court for the Southern District of New York, prosecutors asked that a judge sentence Kwon “to a term of twelve years’ imprisonment and finalize the forfeiture of his criminal proceeds.”
The filing came about four months after the Terraform co-founder pleaded guilty to two counts of wire fraud and conspiracy to defraud.
“In just a few years, Kwon caused losses that eclipsed those caused by Samuel Bankman-Fried [...] Alexander Mashinsky [...] and Karl Sebastian Greenwood [....] combined,” said the Thursday filing. “The Terraform market crash triggered a cascade of crises that swept through cryptocurrency markets and contributed to what has since become known as ‘Crypto Winter.’”
Kwon, who is scheduled to be sentenced on Thursday, was indicted by US authorities in March 2023 for charges including securities fraud, market manipulation, money laundering and wire fraud related to his role at Terraform.
Though his whereabouts were initially unknown after the collapse of Terra in 2022, authorities in Montenegro arrested him on charges unrelated to his role at the company, and he was later extradited to the US.
The price of Terra’s native token, LUNA, surged by more than 40% in the previous 24 hours amid the release of the sentencing recommendation, from about $0.07 to $0.10 at the time of publication. However, the token reached an all-time high price of more than $19.00 before the ecosystem collapsed in May 2022.
Kwon's Defense and Potential Sentencing
In a November court filing, lawyers representing Kwon asked that the Terraform co-founder be given a sentence of no more than five years. His attorneys presented several arguments in favor of a shorter sentence, including that the co-founder could face 40 years in prison in his native South Korea, where prosecutors are also working on a case against him.
“He would not be able to walk out of jail in the United States as a free man for any amount of time: He will be taken from whatever facility in which he serves his sentence directly to an immigration detention center to await a deportation flight to Seoul, where he will immediately reenter pretrial detention pending his criminal charges in South Korea,” said Kwon’s lawyers.
Although Kwon’s and prosecutors’ respective recommendations will remain under consideration, the judge overseeing the sentencing hearing has the authority to sentence the Terraform co-founder to decades in prison, or a significantly shorter time. In contrast, former FTX CEO Sam Bankman-Fried is serving a 25-year sentence after his conviction on seven felony charges, former Celsius CEO Alex Mashinsky was sentenced to 12 years in prison, and a judge sent Karl Sebastian Greenwood to prison for 20 years for his role in the OneCoin scheme.