US prosecutors seek a 12-year sentence for Terraform co-founder
Date: 2025-12-08 Author: Henry Casey Categories: BUSINESS
US federal prosecutors have filed a formal motion seeking a 12-year prison sentence for Terraform Labs co-founder Do Kwon. The motion emphasizes that the scale of the financial losses caused by his actions exceeds the combined damages in the cases of Sam Bankman-Fried, Alex Mashinsky, and Carl Sebastian Greenwood. According to the prosecution, the collapse of the Terraform ecosystem was one of the key events that precipitated the onset of the so-called "crypto winter."
The motion was filed in New York District Court several months after Kwon pleaded guilty to two counts of fraud. Prosecutors allege that he deliberately misled investors by creating the illusion that the Terra and UST projects were sustainable, which ultimately led to a massive market collapse and multibillion-dollar losses.
In addition to the prison term, the prosecution is insisting on the completion of the confiscation of all proceeds from the illegal activity. US authorities believe that the return of these funds should partially compensate the victims for their losses.
The first charges against Kwon were filed back in 2023. They included securities fraud, market manipulation, and money laundering. After the collapse of Terra, he attempted to evade responsibility and evaded justice for a long time. He was ultimately arrested in Montenegro on a separate charge and was subsequently extradited to the United States.
Now the final decision on the sentence will rest with the court. It has the right to either reduce the sentence proposed by the prosecution or impose a harsher sentence. Kwon's defense is seeking a maximum sentence of no more than five years. The lawyers point out that after serving his sentence in the US, their client will be immediately deported to South Korea, where he faces up to 40 years in prison. They say he will effectively be caught between two trials with no real prospect of release.
When determining the sentence, the judge will consider the precedents of similar cases. For comparison, Sam Bankman-Fried is already serving a 25-year sentence, Alex Mashinsky was sentenced to 12 years, and Carl Sebastian Greenwood received 20 years for his participation in the OneCoin fraud scheme. These figures demonstrate the US judicial system's tough stance on cryptocurrency crime.
The outcome of Do Kwon's case could set a landmark precedent for the entire industry, demonstrating how seriously the authorities are prepared to impose penalties on the founders of major crypto projects.
