Do-hyung is now facing a possible 12-year prison sentence in the United States after federal prosecutors called the TerraUSD disaster a “colossal fraud” in a Thursday court filing.
The U.S. government told Judge Paul Engelmayer in New York that the crime was massive enough to wreck entire corners of the crypto industry, from retail investors to exchanges like FTX, which crumbled shortly after.
The sentencing is locked in for December 11, where Judge Engelmayer will decide the fate of the Terraform Labs co-founder. The prosecutors want a harsh sentence because, as they told the court, Do-hyung lied to users and triggered a chain reaction that led to the infamous $40 billion wipeout.
Kwon Offered 5 Years, Feds Want 12
Do-hyung tried to cut his punishment short. In a separate filing last week, he said five years would be enough. He had already pleaded guilty in August to both conspiracy and wire fraud, with a deal that capped the sentence at no more than 12 years.
That deal also forced him to hand over $19.3 million and some of his properties. The government made it clear they are not pursuing restitution, saying it would be too messy to figure out the exact losses for the millions of people who lost money.
International Legal Battles and Extradition
His legal issues haven’t been limited to the U.S. After he was caught using a fake passport in Montenegro in 2023, authorities from South Korea and the U.S. fought over who would get him first.
He ended up being extradited to the U.S. in January, after spending nearly two years locked up in Montenegro over the passport charges.
Even with all that, U.S. officials say they’ll support transferring him to South Korea for the second half of his sentence, but only if he keeps his end of the plea deal and qualifies under an international inmate transfer program.
Broader Context of Crypto Enforcement
The case is landing at a strange moment for crypto enforcement. While Do-hyung’s sentence is being pushed hard by prosecutors, the broader crackdown seems to be losing steam.
Just this October, Donald Trump pardoned Changpeng Zhao, the Binance founder, who was convicted of running the world’s largest crypto exchange without proper anti-money-laundering controls.
The difference in how these two cases are being handled hasn’t gone unnoticed in the crypto world. While Zhao walked, Do-hyung might get locked up for over a decade if the government gets its way.
And with billions lost, no restitution planned, and no clear fix for the victims, the court’s decision next week is likely to set the tone for how hard the U.S. plans to come down on failed crypto founders.