Executive Summary
- US prosecutors have requested a 12-year prison term and asset forfeiture for Do Kwon.
- The filing cites losses surpassing those caused by other major crypto fraud cases.
- Kwon’s defense team has requested a maximum sentence of five years, citing potential extradition.
- The Terraform co-founder pleaded guilty to wire fraud and conspiracy charges four months ago.
US federal prosecutors have formally requested a 12-year prison sentence for Terraform Labs co-founder Do Kwon, according to court filings submitted Thursday in the US District Court for the Southern District of New York. The sentencing recommendation follows Kwon’s guilty plea to charges related to the 2022 collapse of the Terra ecosystem, which resulted in significant financial losses across the cryptocurrency market.
In the filing, attorneys representing the government asked the judge to impose the 12-year term and finalize the forfeiture of criminal proceeds. Prosecutors emphasized the severity of the financial damage, stating in the memorandum that “Kwon caused losses that eclipsed those caused by Samuel Bankman-Fried, Alexander Mashinsky, and Karl Sebastian Greenwood combined.” The filing further noted that the Terraform market crash triggered a cascade of crises known as “Crypto Winter.”
The recommendation comes approximately four months after the Terraform co-founder pleaded guilty to two counts of wire fraud and conspiracy to defraud. Kwon, who was arrested in Montenegro and subsequently extradited to the US, is scheduled to be sentenced next week.
In a counter-filing submitted in November, Kwon’s legal team requested a sentence of no more than five years. His attorneys argued that a longer US sentence is excessive given that Kwon faces potential deportation to South Korea, where prosecutors are preparing a separate case against him. “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,” Kwon’s lawyers stated.
The presiding judge has the authority to determine the final sentence, which could range significantly based on these recommendations. For context, former FTX CEO Sam Bankman-Fried is currently serving a 25-year sentence, while former Celsius CEO Alex Mashinsky received 12 years.
Judicial Context and Precedents
The sentencing request reflects the continued aggressive posture of US authorities toward high-profile cryptocurrency fraud, aiming to align penalties with the scale of market disruption. By drawing comparisons to other convicted crypto executives, prosecutors are establishing a framework for accountability in the digital asset space. The case is further complicated by international legal dynamics, as the outcome in the US will directly influence the timeline for Kwon’s potential prosecution in South Korea. It is important to note that regarding the pending charges in South Korea, all individuals are presumed innocent until proven guilty in a court of law.
