In the case of Terraform Labs and Terra (LUNA) founder Do Kwon, who is accused of defrauding investors, U.S. federal Judge Paul A. Engelmayer requested a series of critical questions from the parties before a hearing on Thursday.
According to court documents, before Kwon's sentence can be announced, uncertainties regarding the applicability of the sentence and the involvement of victims in the process must be resolved.
Judge Engelmayer of the Southern District of New York asked six questions, seeking clarification on issues such as whether Kwon could avoid sentencing if extradited, whether the victims would be willing to testify, and what timeframes would be considered in calculating the sentence. The parties must respond to these questions by December 10th.
One of the critical questions raised was what kind of assurances the US would have that Kwon would be released before completing his sentence if he were transferred to South Korea after serving his sentence in the US. The judge also wanted to know whether investors harmed by the Terraform collapse “want to be heard during the sentencing phase.”
The collapse of Terraform Labs’ ecosystem, which reached a market value of over $50 billion in 2022, was a major turning point in the cryptocurrency market and led to heavy losses for many investors.
Sentencing Proposals and Judicial Clarifications
U.S. federal prosecutors are seeking a 12-year prison sentence for Do Kwon, while his defense is seeking five. Judge Engelmayer requested additional clarification to understand how this difference was justified.
The judge also asked for clarity on the following:
- •Whether the approximately 17 months Kwon spent in Montenegro in detention will be deducted from his sentence
- •The scope of the specific charges he currently faces in South Korea
- •What kind of compensation mechanism will be implemented for the victims?
- •Whether federal sentence reductions and probation terms will apply to Kwon
Engelmayer stated that all these issues should be clarified before the hearing, otherwise problems could arise regarding the applicability of the sentence.