Do Kwon is facing the possibility of a second trial in South Korea after receiving a 15-year prison sentence in the US related to the $40 billion Terra collapse, while South Korean prosecutors are seeking a sentence of over 30 years for violating Capital market laws.
Do Kwon, co-founder of Terraform Labs, could face an additional trial and a lengthy prison sentence in South Korea after being sentenced to 15 years in prison by a federal court in Manhattan for his role in the $40 billion TerraUSD crash.
According to The Korea Times, the 34-year-old South Korean citizen may apply for repatriation after serving half of his sentence in the United States, where prosecutors are seeking a sentence exceeding 30 years for violating Capital market laws.
U.S. District Court Judge Paul Engelmayer handed down his verdict last week, rejecting both the prosecution's 12-year recommendation and the defense's 5-year request.
"In the history of federal prosecutions, few fraud cases have caused the level of damage you have inflicted," Engelmayer said directly to Kwon.
South Korean officials prepare separate prosecutions.
South Korean prosecutors issued an arrest warrant for Kwon in September 2022 through the Joint Financial Crimes Unit of the Seoul Southern District Prosecutors' Office.
A senior prosecutor told local media that prosecuting Kwon domestically would best serve the domestic victims, as some 200,000 South Korean investors have suffered total losses of around 300 billion won (US$204 million).
Ten co-conspirators have been on trial in South Korea for nearly three years, while authorities await the possibility of Kwon's repatriation.
The separate charges in South Korea focus on violations of the Capital Market Act, stemming from the same conduct that formed the basis of the conviction in the United States.
However, South Korean prosecutors assert that they can proceed with independent sanctions regardless of the legal proceedings in the United States.
Kwon initially sought extradition to South Korea instead of the United States after being arrested in Montenegro in March 2023 on charges of possessing forged documents.
He was detained here for nearly two years before being transferred to the United States in December 2024, amid descriptions by his defense team of "cruel" detention conditions.
Terra collapse mechanism and fraudulent claims.
Between 2018 and 2022, Kwon admitted to knowingly participating in schemes to defraud cryptocurrency buyers of Terraform Labs.
This Singapore-based company has issued the stablecoin TerraUSD and its "sister" Token Luna, claiming that Terra maintains a 1:1 Peg exchange rate to the USD through its protocol design.
When Terra dropped below $1 in May 2021, Kwon publicly stated that the protocol had automatically restored its value.
Subsequently, U.S. prosecutors discovered that an investment firm hired by Terraform Labs had secretly purchased Terra to artificially inflate its price, while Jump Trading's Vai was deliberately concealed from investors.
Both Token continued their downward spiral in May 2022, wiping out tens of billions of dollars worth of investor value and triggering a widespread crash across the cryptocurrency market.
Federal prosecutors specifically emphasized that this collapse contributed to the downfall of FTX, run by Sam Bankman-Fried, as evidence that the systemic damage went far beyond Terra's direct losses.
Kwon was convicted on nine charges, including fraud and money laundering, and Judge Engelmayer ordered the seizure of $19 million in illicit gains.
The initial potential sentence under U.S. guidelines was up to 130 years in prison, but the plea agreement in August limited the prosecutor's recommendation to 12 years.
Discrepancies in sentencing and transfer mechanisms
Judge Engelmayer called the proposed 12-year sentence "unreasonable" and rejected the 5-year offer as "unacceptable," ultimately declaring the 15-year sentence "the lowest I can apply."
The defense argued that being prosecuted simultaneously in two countries should be XEM in sentencing calculations, especially when the charges overlap across jurisdictions.
The court rejected this argument, with Engelmayer asserting that a court cannot make a ruling based on speculation about another court's decision.
US prosecutors said they would not oppose a request for transfer under the International Prisoner Transfer Program after Kwon has served half of his sentence, leaving the path open for prosecution in South Korea.
The difference in handling compared to Bankman-Fried's 25-year sentence has raised questions about consistency, as Kwon's guilty plea significantly reduced his level of responsibility despite Terra causing greater damage.
Legal experts say that under federal guidance, fraud cases on the scale of Terra typically carry recommended penalties that approach life imprisonment before statutory limits are applied.
Kwon will have the time he served in the U.S. deducted from his sentence; however, it remains to be seen whether the 21 months he spent in Montenegro will count towards his U.S. sentence.
This sentence comes amid a global surge in cryptocurrency-related crime.
Recently, authorities in Spain and Denmark arrested nine suspects in a violent kidnapping and murder case targeting the victim's Cryptoasset .
Just last month, South Australian state police also filed 800 charges against 55 individuals in a large-scale criminal ring linked to cryptocurrency.
