US Department of Justice Seeks 12-Year Prison Sentence for Terra Founder in $40 Billion Fraud Case

According to the latest court documents, the US Department of Justice is seeking a maximum sentence of 12 years in prison for Terraform Labs co-founder Do Kwon.

This sentencing request is based on a plea agreement reached between both parties in August of this year, when Do Kwon admitted to conspiracy to commit fraud and wire fraud, while prosecutors pledged the sentence would not exceed 12 years. Now, prosecutors are advocating for the maximum penalty in accordance with that agreement.

Prosecutors specifically emphasized the issue of sentencing consistency in their filings, stating that “unwarranted sentencing disparities” with similar cases must be avoided, especially when compared to the case of FTX founder Sam Bankman-Fried (SBF), who was sentenced to 25 years. Do Kwon’s final sentence will be handed down by a Manhattan federal court judge on December 11.

Do Kwon, a 34-year-old South Korean national, became embroiled in a global financial crisis in 2022. The two cryptocurrencies he created, UST and LUNA, rapidly became worthless, wiping out more than $40 billion in market value and triggering a chain crisis across the crypto markets. The crisis also affected FTX and several other well-known companies.

Prosecutors believe that Do Kwon’s crimes resulted in over $40 billion in investor losses, and that the scale and “contagion effect” had a widespread impact on the crypto market, making the severity of his crimes even greater than those of Celsius founder Alex Mashinsky (who was sentenced to 12 years for involvement in about $5 billion). Therefore, they argue, a 12-year sentence is reasonable and necessary.

Prosecutors also rejected the defense arguments previously put forward by Do Kwon’s legal team, who sought a sentence reduction of about 5 years. The defense had cited Do Kwon’s “youth and lack of experience,” trying to draw parallels with Mashinsky’s case to obtain a shorter sentence.

However, the Department of Justice emphasized that Do Kwon’s use of a fake passport to flee after committing the crime further aggravated his culpability. Prosecutors argue that the serious nature of Do Kwon’s crimes warrants strict punishment under the law. This stance also signals the US government’s ongoing determination to hold crypto fraud cases strictly accountable.

Finally, do you think that in the emerging field of cryptocurrency, sentencing should take into account the “industry’s unique characteristics” for more lenient consideration, or should it be as strict as for traditional financial crimes?

#DoKwon #Crypto Fraud