Crypto entrepreneur Do Kwon has asked a U.S. court to cap his prison sentence at five years for his role in the multi-billion dollar collapse of the Terra ecosystem, citing time already spent jailed in Montenegro, despite facing a potential 40-year term in South Korea for similar charges.
Kwon, 33, pleaded guilty in August to two charges: conspiracy to defraud and wire fraud. He submitted his sentencing recommendation to a federal court in Manhattan.
His lawyers argue that a five-year sentence is sufficient. They point to the nearly three years he has already served in prison in Montenegro, describing the conditions there as “brutal.”
The defense also cites the personal and economic impact Kwon has already experienced since the collapse.
As part of a plea agreement with federal prosecutors in New York, Kwon committed to surrendering over $19 million in assets. In return, prosecutors agreed not to seek a prison term exceeding 12 years.
The Terra ecosystem, which Kwon co-founded, collapsed dramatically in May 2022. The platform’s algorithmic stablecoin, UST, and its sister token, LUNA, lost their value.
This crash wiped out more than $40 billion in market value. It also triggered a series of bankruptcies across the wider crypto industry, affecting numerous retail investors and major firms such as Three Arrows Capital.
Kwon was arrested in Montenegro in 2023. He was apprehended for using falsified travel documents while attempting to evade charges in South Korea.
The sentencing hearing in the U.S. case is scheduled for December 11 in Manhattan. Federal Judge Paul Engelmayer will preside over the hearing.
The ongoing dual legal proceedings in the United States and South Korea highlight the complex global regulatory challenges facing decentralized finance. The outcome of Kwon’s case could establish an important precedent for future convictions in non-violent financial fraud within the cryptocurrency sector.
By comparison, former FTX CEO Sam Bankman-Fried was sentenced to 25 years in prison in 2024 for defrauding customers. Bankman-Fried has since challenged his conviction and sentence.