The legal team for Do Kwon, co-founder of Terraform Labs, is advocating for a reduced prison sentence, arguing that their client has already endured significant hardship due to his involvement in the monumental crash of TerraUSD (UST). They believe this should factor into the court’s decision.
Do Kwon Argues for a Lenient Sentence
Recently, Do Kwon made a public appeal for a maximum sentence of just five years in relation to his role in the $40 billion fallout of TerraUSD in 2022.
In their sentencing proposal, as reported by Bloomberg, his lawyers contended that this five-year sentence is warranted, given that Kwon has already spent close to three years in various detention conditions, including those noted as severe while in Montenegro.
His attorneys emphasized that Kwon has “suffered considerably for his actions,” and that the prosecutor’s recommendation of a 12-year term is unreasonably harsh, arguing that the justice system should focus more on equitable compensation than punitive measures.
Additionally, the legal filing highlighted Kwon’s agreement to relinquish assets exceeding $19 million alongside some properties as part of a plea agreement reached in August. Reports indicate that Kwon pleaded guilty to two out of nine counts outlined by US authorities.
Initially, Kwon had maintained a not guilty plea to a series of accusations encompassing securities and wire fraud, as well as conspiracy-related charges. However, he shifted his position in August to accept plea deals concerning conspiracy to defraud and additional charges.
Kwon has publicly expressed remorse for his actions, admitting to making “false claims” and failing to reveal the involvement of a trading firm that helped stabilize TerraUSD in 2021, stating, “My conduct was incorrect.”
Prosecutors are anticipated to submit their formal sentencing recommendation shortly. Under the terms of the plea agreement, they will not advocate for a term exceeding 12 years. The sentencing hearing, presided over by US District Judge Paul Engelmayer, is set for December 11, 2025, in New York City.
Ongoing Legal Challenges in South Korea
Kwon’s legal representatives brought to light that their client is facing additional legal actions back in South Korea, where he is charged with offenses that could carry a prison sentence of up to 40 years.
The collapse of Terraform Labs prompted investigations by both South Korean and US law enforcement, but Kwon had eluded capture for an extended period, fleeing his native country for Singapore prior to the company’s downfall.
In March 2023, he was apprehended in Montenegro, accompanying Terraform Labs’ former chief financial officer, Han Chang-joon, while attempting to board a flight using forged identification at Podgorica Airport. Following multiple judicial procedures, Kwon remained in custody for over a year and experienced a four-month prison sentence, later extended by two months at the request of authorities from both the US and South Korea.
This complex extradition case has involved a drawn-out legal process. Although Montenegro initially approved the extradition request from South Korea, Kwon was ultimately transferred to the US on December 31, 2024, following authorization from Montenegro’s interior ministry.
