U.S. prosecutors seek 12-year heavy sentence for Do Kwon: TerraUSD’s $40 billion collapse is "unprecedented," verdict to be revealed on 12/11

On Friday (5th), U.S. federal prosecutors formally submitted a sentencing recommendation to the Southern District Federal Court of New York, requesting a 12-year prison sentence for Terraform Labs co-founder Do Kwon.

(Prior Coverage: Do Kwon admits to fraud: I deceived investors who bought UST/LUNA, very sorry… hopes for significant sentence reduction)
(Background Supplement: Do Kwon pleads guilty but seeks a lighter sentence of “within 5 years”! Is it possible? TerraUSD once evaporated $40 billion)

On Friday (5th), U.S. federal prosecutors formally submitted a sentencing recommendation to the Southern District Federal Court of New York, requesting a 12-year prison sentence for Terraform Labs co-founder Do Kwon. This sentencing recommendation stems from the 2022 algorithmic stablecoin TerraUSD (UST) and its sister token Luna’s death spiral collapse, which caused approximately $40 billion in losses to global investors, marking it as the largest disaster in cryptocurrency history.

12 Years Already Considered Lenient
Prosecutors alleged that Do Kwon artificially inflated the price of Terra ecosystem tokens through extensive false promotion to investors, secret market price manipulation, and other fraudulent means. TerraUSD, touted as an “algorithmic stablecoin,” was supposed to be pegged 1:1 to the US dollar, but instantly collapsed in May 2022 after the interlocking mechanism with Luna tokens failed, resulting in a bloodbath across the crypto market.

Prosecutors emphasized that Do Kwon’s fraudulent amount far exceeded the combined losses of renowned cases involving FTX founder Sam Bankman-Fried (SBF), Celsius founder Alex Mashinsky, and OneCoin co-founder Karl Sebastian Greenwood, calling it “unprecedented.”

In August this year, Do Kwon pleaded guilty in Manhattan federal court to two felony charges: “conspiracy to commit fraud” and “wire fraud.” The plea agreement indicated that Do Kwon could have faced up to 25 years in prison, but prosecutors agreed to a cap of 12 years in exchange for him waiving his right to a jury trial.

In the latest document, prosecutors strongly criticized Do Kwon for “depriving investors of the right to know, artificially inflating Terraform crypto asset prices, and directly profiting personally in terms of both wealth and reputation.” Prosecutors also cited Sam Bankman-Fried’s 25-year sentence as a comparison, arguing that Do Kwon’s youth or “lack of experience” is not a reason for leniency and that he should be sentenced to the maximum 12 years under the agreement for maximum deterrent effect.

Do Kwon’s Defense Lawyers Seek Lighter Sentence
In contrast, Do Kwon’s defense team submitted a request to the court in November, asking that the sentence be kept within 5 years. The defense argued: Do Kwon has admitted his mistakes and shown deep remorse; he has already been detained in Montenegro for nearly 3 years, including 4 months in extremely harsh conditions; Korean prosecutors are seeking up to 40 years on separate charges, and if the US imposes a heavy sentence as well, it would constitute “excessive punishment.”

Final Verdict to Be Announced 12/11
The final sentence will be handed down by Federal Judge Paul Engelmayer of the Southern District of New York on December 11, 2025. The judge has discretion within the plea agreement, so the sentence could range from 5 to 12 years. However, after serving his sentence, Do Kwon is likely to be extradited back to South Korea to face another trial there, which could result in decades more behind bars.

Related Reports
Do Kwon rumored to plead guilty! After LUNA’s collapse, faces nine criminal charges including fraud and money laundering
Do Kwon extradited to the US! Faces $40 billion LUNA fraud charges
Finally? Montenegro’s Ministry of Justice orders Do Kwon to be extradited to the US, shattering Terra founder’s dream of returning to Korea
<US Prosecutors Seek 12-Year Sentence for Do Kwon: TerraUSD’s $40 Billion Collapse “Unprecedented,” Verdict on 12/11> This article was first published on BlockTempo, the most influential blockchain news media.