Do Kwon, the founder of the Terra (LUNA) ecosystem, may face legal problems that are not limited to the 15-year prison sentence he received in the US.
South Korean prosecutors say Kwon could face a separate criminal trial in his home country for the 2022 collapse of TerraUSD and LUNA, which could mean decades of additional prison sentences.
According to officials speaking to South Korean media, Kwon is accused of violating the Capital Markets Law. Prosecutors say that a potential conviction could result in a sentence exceeding 30 years, adding that this process is critical for compensating local victims. South Korean authorities estimate that approximately 200,000 investors in the country suffered a total loss of $204 million (approximately 300 billion won) due to the Terra collapse.
In a trial that concluded last week in the US, Judge Paul Engelmayer of the Southern District of New York sentenced Do Kwon to 15 years in prison on nine separate counts. The court also ordered the confiscation of $19 million in illicit gains. Thirty-five victim letters submitted to the court during the trial highlighted bankruptcies, health problems, and suicides among investors.
TerraUSD, developed under the Singapore-based structure of Terraform Labs, was launched with the claim that it would be pegged to the US dollar, but the mechanism collapsed in May 2022, resulting in a market loss of approximately $40 billion. This process led to a chain reaction of bankruptcies in the cryptocurrency markets. US prosecutors also determined that an investment firm working on behalf of Terraform Labs secretly made purchases to artificially inflate the price of Terra.
Do Kwon was arrested in Montenegro in March 2023 while attempting to travel with a fake passport, and after a months-long extradition process, he was sent to the US in December. It is reported that after serving half of his sentence, Kwon could request extradition to South Korea under the International Prisoner Transfer Program, and US prosecutors are unlikely to object to this request.
On the other hand, differing opinions are emerging in South Korean public opinion. Cybercrime consultant David Sehyeon Baek states that some victims believe the sentence given in the US is a more deterrent than a possible decision in South Korea. According to Baek, the fact that large-scale financial crimes are sometimes considered “business failures” in South Korea reinforces the perception that sufficient accountability is not being ensured.
Baek also argues that Do Kwon cannot claim unaware of the risks involved, stating that it was known that investors would suffer losses if the system collapsed, yet the process continued anyway.
*This is not investment advice.
