Federal prosecutors are pushing for a 12-year sentence for Terraform Labs co-founder Do Kwon, arguing that his actions triggered more damage across the crypto market than several of the industry’s most notorious figures combined.
Prosecutors Say Kwon’s Actions Caused Unmatched Market Damage
United States attorneys have urged a federal judge to hand Do Kwon a 12-year prison term when he appears for sentencing next week. In a filing submitted Thursday in the Southern District of New York, prosecutors asked the court to impose the sentence and finalize the forfeiture of what they described as his criminal proceeds.
The request comes roughly four months after Kwon pleaded guilty to two counts, including wire fraud and conspiracy to defraud. Prosecutors argued that the collapse of Terraform’s ecosystem led to market-wide turmoil and helped usher in what investors widely refer to as “Crypto Winter.”
Terraform Crash Compared to Major Crypto Scandals
The filing sharply compared Kwon’s impact to that of Sam Bankman-Fried, Alex Mashinsky and Karl Sebastian Greenwood, stating that the losses tied to Kwon surpassed all three combined. Prosecutors said the sudden crash of Terra’s tokens created a chain reaction through the broader crypto market, wiping out billions in value and shaking investor confidence globally.
Kwon was arrested in Montenegro in 2023 on unrelated charges after fleeing following Terra’s implosion in 2022. He was later extradited to the United States to face charges including securities fraud, market manipulation, money laundering and wire fraud.
Kwon Faces Possible Prison Time in South Korea After US Term
Earlier court filings show that Kwon’s legal team is seeking a far lighter sentence, asking the court to consider a term of no more than five years. They argued that Kwon may still face up to 40 years in prison in South Korea, where prosecutors are preparing their own case.
His lawyers noted that even after finishing whatever sentence he serves in the United States, he will be transferred immediately to immigration custody and deported to Seoul, where he will return to detention ahead of trial.
The judge presiding over next week’s hearing has broad discretion and may impose a sentence significantly longer or shorter than what either side has recommended. For comparison, former FTX CEO Sam Bankman-Fried is serving 25 years, former Celsius CEO Alex Mashinsky received 12 years, and Karl Sebastian Greenwood was sentenced to 20 years for his role in OneCoin.