A U.S. attorney representing the federal government has asked a judge to sentence Terraform Labs co-founder Do Kwon to 12 years in prison at next week’s sentencing hearing.
In documents filed Thursday in the U.S. District Court for the Southern District of New York, prosecutors asked the judge to sentence Kwon to 12 years in prison and to finalize the forfeiture of the proceeds of crime.
The filing comes about four months after Terraform’s co-founder pleaded guilty to two counts of wire fraud and conspiracy to defraud.
“In just a few years, Mr. Kwon has caused more losses than Mr. Samuel Bankman Freed (…), Mr. Alexander Mashinsky (…), and Mr. Carl Sebastian Greenwood (…). combined “The collapse of the Terraform market triggered a series of crises that swept the cryptocurrency market and contributed to what became known as the ‘crypto winter,’” Thursday’s filing states.
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Kwon, who is scheduled to be sentenced Thursday, was indicted by U.S. authorities in March 2023 on charges including securities fraud, market manipulation, money laundering and wire fraud related to his role at Terraform.
His whereabouts were initially unknown after Tela’s collapse in 2022, but Montenegrin authorities arrested him on charges unrelated to his role in the company and he was subsequently extradited to the United States.
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The price of Terra’s native token LUNA surged more than 40% in the past 24 hours during the announcement of the sentencing recommendation, increasing from approximately $0.07 to $0.10 at the time of the announcement. However, the token reached an all-time high of over $19.00 before the ecosystem collapsed in May 2022.
Kwon says he could still face a prison sentence in South Korea.
In a November court filing, lawyers representing Kwon asked that the Terraform co-founder be sentenced to no more than five years in prison. His lawyers offered several arguments in favor of a shorter sentence, including that the co-founder could face up to 40 years in prison in his native South Korea, and that prosecutors are pursuing a case against him.
“Mr. Kwon will not be able to emerge from a U.S. prison as a free man for any period of time. He will be transferred directly from the facility where he completed his sentence to an immigration detention center to await a deportation flight to Seoul, where he will immediately be remanded to pretrial detention pending criminal charges in South Korea,” Kwon’s attorney said.
While Kwon and prosecutors’ respective recommendations remain under consideration, the judge overseeing the sentencing hearing has the power to sentence the Terraform co-founder to decades in prison or significantly less. By contrast, former FTX CEO Sam Bankman Freed was convicted of seven felonies and is serving a 25-year sentence, former Celsius CEO Alex Mashinsky was sentenced to 12 years in prison, and a judge sentenced Karl Sebastian Greenwood to 20 years in prison for his role in the OneCoin scheme.
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