Sentencing Preparation and Judicial Inquiry
Terraform Labs co-founder Do Kwon is scheduled to be sentenced on Thursday, December 11, after pleading guilty to two felony charges. In preparation for the sentence ruling, a US District Court for the Southern District of New York, Judge Paul Engelmayer has requested more information about the legal issues that Kwon encountered in his home country of South Korea and in Montenegro.
This request was made public after a US federal judge shared a court filing dated Monday, December 8. In this filing, Engelmayer sought clarity from Kwon’s lawyers and the government attorneys regarding the charges the CEO faced in South Korea. The Judge also asked about the minimum and maximum sentences that are likely to be imposed.
The main reason behind the US Judge Engelmayer’s concern about South Korea is the fact that there is a high likelihood that Kwon might be sent there after serving time in the US.
Judge Engelmayer Seeks More Clarity on Kwon’s Charges
Earlier, the court found Kwon guilty of two counts in August. This involved wire fraud and conspiracy to commit fraud. To serve as a warning to those with such intentions, sources noted that Judge Engelmayer is set to announce the CEO’s upcoming sentence on Thursday this week.
Regarding the judge’s inquiry, reports indicate that apart from Engelmayer, who requested clarity on the possible time Kwon could serve in South Korea, he also sought to understand whether the two sides agreed that none of his time in custody in Montenegro would be counted towards any possible sentence he might encounter in the US.
Notably, Kwon served four months in Montenegro after the relevant authorities discovered that he used fake travel documents and had a history of fighting extradition to the US for more than a year.
Meanwhile, Engelmayer also shared his concerns regarding Kwon’s transfer to South Korea. According to him, if the US decided to extradite the CEO to an Asian country to serve the second part of his sentence, South Korean authorities might consider releasing him earlier.
Background of the Terra Ecosystem Collapse
It is worth noting that Kwon was a prominent figure in the crypto and blockchain ecosystem in 2022. This fact was disregarded when news leaked that the Terra ecosystem collapsed.
At this time, several analysts weighed in on the situation. They claimed that this collapse resulted in substantial losses for investors and the entire market after it declined. This market decline also caused most firms to go bankrupt, the analysts added.
Sentencing Recommendations and Comparisons
While Kwon’s sentencing ignites heated debates in the industry, reports noted that his defense attorneys requested that the CEO face five years in the US at most. On the other hand, prosecutors requested a sentence of at least twelve years.
To illustrate the intense nature of the situation, reports highlighted that the US government’s recommendation declared Kwon’s illegal actions resulted in significant financial losses greater than those incurred following the unlawful actions of former FTX CEO Sam Bankman-Fried, former Celsius CEO Alex Mashinsky, and OneCoin’s Karl Sebastian Greenwood combined. After pleading guilty, these three men are reportedly facing long sentences in federal prison.
Kwon’s Lawyers Raise Concerns About His Sentencing Period
Kwon’s lawyers acknowledged that the CEO would return to pretrial detention due to the criminal charges raised in South Korea, even if Judge Engelmayer chose to include the time he had already served. There, sources with knowledge of the matter speculated that he could serve for 40 years in prison since he has citizenship of that country.
Still, sources noted that Thursday’s sentencing hearing is crucial as it could bring to a conclusion Kwon’s involvement in the 2023 collapse of Terraform.
Ironically, no one knew where Kwon was hiding as the crypto market crashed. His presence was disclosed during his arrest in Montenegro, an international country where he is now detained until he is repatriated to the United States. The initial charge against his illegal actions was in March 2023.
With the US federal judge overseeing that case, sentencing is scheduled for December 11. Will he heed prosecutors’ insistence on a tough sentence — or acknowledge the far-reaching international context that Do Kwon’s attorneys argue makes even five years out of proportion? With the sheer scale of the collapse of TerraUSD and LUNA, it seems unlikely the ruling will merely apply to one man — and could determine how crypto-era frauds are punished around the world.