South Korean cryptocurrency mogul Do Kwon is about to face 12 years in prison for his role in the 2022 TerraUSD collapse, a “colossal” fraud that triggered $40 billion loss in users funds. Sentencing is scheduled for Dec. 11.
Crypto supporters are now wondering why such a harsh punishment, and what Do Kwon’s team says in his defense?
On December 4, a new filing was sent to Judge Paul Engelmayer in New York, where the government explained why it believes Do Kwon deserves such a long prison sentence.
Prosecutors explained that Kwon kept saying TerraUSD (UST) was safe and would always stay at $1, giving false hope to the investors.
But in May 2022, UST suddenly collapsed, and billions of dollars vanished almost overnight. They say this crash didn’t just hurt Terra investors. It triggered big problems across the whole crypto market, even contributing to failures that later connected to huge disasters like FTX.
According to the US prosecutors, Kwon hid important facts and made people trust a system that was already unstable. Because of all this, they believe 12 years is a fair sentence.
Do Kwon’s lawyers disagree with the long sentence suggested by U.S. prosecutors. They say that a shorter sentence, around five years or less, would be more fair because the Terra crash was not caused by Kwon alone.
According to his defense team, several outside factors added to the collapse. They claim that:
His lawyers also shared research papers and blockchain analysis to support their argument.
Do Kwon has already pleaded guilty to wire fraud and conspiracy to defraud, after being charged in March 2023 with several counts linked to fraud and market manipulation.
The sentencing hearing set for December 11 will mark a crucial moment not just for Kwon, but for the broader crypto world. Many victims are hoping for justice. They say Kwon destroyed families, ruined retirements, and shattered dreams.
Some people lost everything they had worked for their entire lives because they believed his promises.
Legal experts expect the judge will consider the enormity of losses and investor harm caused by the collapse.
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