Terraform Labs co-founder Do Kwon faces the potential for a further trial and prolonged jail time period in South Korea following his 15-year sentence from a Manhattan federal courtroom for orchestrating the $40 billion TerraUSD collapse.
In line with The Korea Instances, the 34-year-old Korean nationwide might apply to be transferred to his residence nation after serving half his US time period, the place prosecutors are searching for a sentence exceeding 30 years for violations of capital markets legal guidelines.
US District Decide Paul Engelmayer delivered the sentence final week, rejecting each the prosecution’s 12-year advice and the protection’s five-year request.
“Within the historical past of federal prosecutions, there are few frauds which have induced as a lot hurt as you may have,” Engelmayer instructed Kwon immediately.
Korean Authorities Put together Separate Prosecution
South Korean prosecutors obtained an arrest warrant for Kwon in September 2022 by means of the Seoul Southern District Prosecutors’ Workplace joint monetary crimes unit.
A senior prosecutor instructed the native report that prosecuting Kwon domestically would serve native victims most successfully, as roughly 200,000 Korean traders have suffered losses totaling roughly 300 billion gained ($204 million).
Ten alleged accomplices have confronted trial in Korea for practically three years whereas authorities awaited Kwon’s potential return.
The separate Korean fees heart on violations of the Capital Markets Act stemming from the identical conduct underlying his US conviction.
Nevertheless, Korean prosecutors preserve they will pursue impartial punishment whatever the American proceedings.
Kwon initially sought extradition to Korea somewhat than to the USA after his March 2023 arrest in Montenegro on fees of possessing solid paperwork.
He spent practically two years detained there earlier than switch to America in December 2024, along with his protection staff describing the situations as “brutal.”
US prosecutors demand 12-year sentence for Do Kwon after Terra's $40B collapse that destabilized crypto markets and aided FTX implosion.#FTX #DoKwon #TerraFormhttps://t.co/LfzwEWH4XG
— Cryptonews.com (@cryptonews) December 6, 2025
Terra Collapse Mechanics and Fraudulent Claims
Between 2018 and 2022, Kwon admitted to knowingly collaborating in schemes to defraud Terraform Labs’ crypto purchasers.
The Singapore-based agency issued the TerraUSD stablecoin and its sister token, Luna, claiming that Terra maintained a one-to-one greenback peg by means of its protocol design.
When Terra fell beneath $1 in Might 2021, Kwon publicly said the protocol had restored its worth autonomously.
US prosecutors later found that an funding agency contracted by Terraform Labs had secretly bought Terra to artificially prop up its worth, with Bounce Buying and selling’s position intentionally hid from traders.
Each tokens plunged once more in Might 2022, wiping out tens of billions in investor worth and triggering cascading failures throughout cryptocurrency markets.
Federal prosecutors particularly cited the collapse’s contribution to Sam Bankman-Fried’s FTX implosion as proof of broader systemic injury past Terra’s speedy losses.
Kwon was convicted on 9 counts, together with fraud and cash laundering, and Decide Engelmayer ordered the forfeiture of $19 million in illicit positive factors.
The preliminary potential sentence below US pointers was 130 years, however the August plea settlement capped prosecutorial suggestions at 12 years.
Sentencing Disparities and Switch Mechanics
Decide Engelmayer referred to as the 12-year advice “unreasonable” whereas dismissing the five-year request as “implausible,” in the end imposing 15 years as “the least I can impose.”
The protection argued that twin prosecution ought to be factored into sentencing calculations, significantly given the overlap in allegations throughout jurisdictions.
The courtroom rejected this reasoning, with Engelmayer stating that one courtroom can’t base rulings on hypothesis about one other courtroom’s selections.
US prosecutors indicated they might not oppose a switch request below the Worldwide Prisoner Switch Program after Kwon serves half his sentence, leaving the pathway to Korean prosecution open.
US District Decide Paul A. Engelmayer handed down a 15-year jail sentence to Terraform Labs co-founder Do Kwon for Terra's $40 billion crash.#DoKwon #TerraUSD #CryptoFraudhttps://t.co/7N3WlnQrTB
— Cryptonews.com (@cryptonews) December 12, 2025
The contrasting remedy in comparison with Bankman-Fried’s 25-year sentence has raised questions on consistency, as Kwon’s responsible plea considerably lowered publicity regardless of Terra’s bigger loss.
Authorized specialists notice that federal pointers for fraud at Terra’s scale sometimes recommend advisory ranges approaching life imprisonment earlier than statutory caps.
Kwon will obtain credit score for time served in US custody, although questions stay about whether or not his 21-month detention in Montenegro will rely towards his American time period.
The sentencing comes amid escalating crypto-related legal exercise worldwide.
Spanish and Danish authorities just lately arrested 9 suspects in a violent kidnapping and homicide focusing on a sufferer’s crypto holdings.
Simply final month, South Australia Police additionally filed 800 fees towards 55 people in an enormous crypto-linked crime ring.
The put up Do Kwon May Face Second Trial in Korea After 15-Yr US Sentence appeared first on Cryptonews.