Do Kwon, the founder of Terraform Labs, is presently awaiting a prison sentence for his involvement in the collapse of the Terra and Luna tokens – that cost around $40 billion in investor losses. The South Korean crypto entrepreneur is seeking a five-year prison sentence in the U.S. after he pleaded guilty to two fraud charges in August this year.
Kwon, 33, also faces charges in South Korea wherein he could be looking at a 40-year prison sentence for his fraudulent business practices. Highlighting the situation, Kwon’s lawyers have urged the U.S court to consider sufficing his prison tenure to five years.
As per reports, the U.S. court could be looking at a 12-year-jailtime for Kwon. The lawyers defending Kown, however, have submitted a 23-page document to the U.S. District Court for the Southern District of New York seeking this significant reduction. Some have called Kwon’s request strikingly lenient given that the collapse of Terra and Luna caused financial damage to thousands of investors.
“Do’s criminal conduct was not motivated by personal greed or enrichment, but rather flowed initially from his ‘hubris’ and later from the desperation of a young founder who made serious mistakes while facing pressures he was ill-equipped to handle,” Bloomberg quoted the letter from Kwon’s lawyers as saying.
The Terra-LUNA crash occurred in May 2022 after the ecosystem’s stablecoin TerraUSD (UST) was de-pegged – leading to billions of dollars in losses.
In August, the U.S. Department of Justice announced that Kwon had pled guilty to having committed commodities fraud and wire fraud.
“At its peak in the spring of 2022, the total apparent market value of all UST and LUNA exceeded $50 billion. Much of this growth followed KWON’s misrepresentations about Terraform and its technology, including efforts in May 2021 by KWON and his associates to secretly manipulate the market for UST,” the DoJ stated.
Kwon was arrested in Europe back in March 2023, caught travelling on a false passport. The U.S. then submitted a formal request for Kwon’s arrest and extradition from Montenegro and the U.S. that happened in December 2024. Kwon served a detention of nearly two years in Montenegro, as noted by his lawyers.
Kwon’s court hearing in Manhattan is scheduled for December 11. The judge is likely to finalize the term of his prison sentencing at this hearing.