Federal prosecutors have asked a U.S. judge to impose at least a 12-year prison term on Terraform Labs co-founder Do Kwon for his role in the collapse of the Terra crypto ecosystem.
Kwon, a 34-year-old South Korean, pleaded guilty in August as part of a plea deal to conspiracy to commit fraud and wire fraud. Although the statutory maximum for his offenses is roughly 25 years, the plea agreement limited the government to seeking up to 12 years; prosecutors are now urging the court to impose a sentence near the top of that agreed range.
In a sentencing submission to U.S. District Judge Paul Engelmayer in Manhattan, Department of Justice attorneys argued that a substantial term is necessary both to reflect the size of the harm and to deter similar misconduct. The filing warned against “unwarranted sentencing disparities” and pointed to the 25-year sentence handed to FTX founder Sam Bankman‑Fried as a comparator. Prosecutors also rejected Kwon’s lawyers’ request for a five-year term and declined the defense’s suggestion that Kwon receive a far lighter sentence than other crypto figures, including Alex Mashinsky, who was sentenced to 12 years earlier this year.
Prosecutors say Kwon misled investors about the risks and stability of the algorithmic stablecoin UST and its paired token LUNA. In 2022 those tokens collapsed to near zero, eliminating more than $40 billion in market value and sparking a wider contagion that contributed to the failure of multiple crypto firms. The filing alleges Kwon deprived purchasers of information necessary to make informed decisions, artificially inflated the value of Terraform tokens, and personally benefited while enhancing his public profile.
After the crash, Kwon fled and was arrested in Montenegro in 2023 while traveling on a forged passport. Following a lengthy jurisdictional dispute, he was extradited to New York earlier this year.
The Justice Department said Kwon’s actions, the consequences of the scheme and his conduct after the collapse justify a significant prison term, adding that the facts could support the statutory maximum. Kwon’s sentencing is scheduled for December 11 in Manhattan.