Terraform Labs co-founder Do Kwon should be sentenced to 12 years in prison for the fraud that resulted in the collapse of LUNA and the TerraUSD stablecoin in 2022, causing a total loss of $40 billion, US prosecutors have requested.
Prosecutors said in a petition filed in New York federal court that Kwon's crime was “colossal in scope.”
According to prosecutors, Kwon's misinformation to investors not only triggered the collapse of the Terra ecosystem but also triggered a cascade of crises throughout the cryptocurrency market, with widespread impact extending to the collapse of Sam Bankman-Fried's FTX exchange.
Do Kwon's sentence will be announced by US District Judge Paul Engelmayer on December 11.
The developments in Kwon's case come amid a significant easing of cryptocurrency sanctions by the Trump administration. President Donald Trump granted clemency to Binance founder Changpeng Zhao on October 23.
Kwon, 34, requested a five-year prison sentence in his own court filing last week. He pleaded guilty in August to conspiracy and wire fraud in a deal in which prosecutors agreed to seek the maximum 12 years.
As part of the settlement, Kwon agreed to hand over $19.3 million in assets, as well as various properties. Prosecutors said they would not seek individual restitution of the $40 billion in losses because the losses were complex and involved millions of investors.
Do Kwon was charged in both the US and South Korea, and a lengthy extradition process ensued between the two countries after he was arrested in Montenegro in 2023 while traveling with a fake passport. Kwon was extradited to the US in January after serving nearly two years in prison in the Balkan country for forging documents.
*This is not investment advice.