Terraform Labs co-founder Do Kwon has formally requested a United States judge to limit his prison sentence to five years. This request arises in the context of the infamous TerraUSD Case, which caused massive losses in the global crypto market in 2022. In a court filing made this Wednesday, the defense argued before the court that a longer conviction would be excessive, given the physical and financial punishment the entrepreneur has already endured during his detention abroad.
Kwon’s legal team emphasizes that their client has spent nearly three years behind bars, describing that more than half that time was spent in “brutal conditions” inside a prison in Montenegro. After being extradited, Kwon pleaded guilty in August to charges of wire fraud and conspiracy to defraud, seeking a quick resolution. Under the plea agreement, US prosecutors agreed not to seek a sentence exceeding 12 years. However, his lawyers insist that any penalty exceeding five years is “far greater than necessary” to serve justice. Additionally, as part of the deal, Kwon agreed to forfeit more than 19 million dollars and several properties.
Is the Proposed Penalty Sufficient Considering the Magnitude of the Global Financial Collapse?
It is vital to remember that the TerraUSD Case not only involved the fall of a stablecoin but erased approximately $40 billion of value from the markets. Therefore, the request for leniency contrasts sharply with the financial devastation suffered by thousands of retail and institutional investors. The defense argues that the fines and time served already constitute significant retribution. However, the severity of the financial crimes committed suggests that the prosecution could push for the agreed maximum in the coming days.
On the other hand, Kwon’s legal odyssey is far from over with the US sentence. Prosecutors in South Korea are pursuing a separate case linked to the same catastrophic events. In his home country, authorities seek an exemplary conviction of up to 40 years in prison for his role in the disaster. Thus, the resolution in New York will serve only as the first chapter of a long transcontinental legal battle. Coordination between both jurisdictions will be key to determining the entrepreneur’s final fate.
District Judge Paul Engelmayer will hand down the final sentence in Manhattan on December 11. While the cryptocurrency market attempts to rebuild the trust lost after these systemic events, the community watches the verdict closely. The outcome of this hearing will set a crucial precedent regarding criminal liability for founders of failed projects. Finally, Do Kwon’s fate will serve as a warning about the legal consequences of mismanagement of digital assets on a large scale.
