 
 
Lawyers for Terraform Labs’ founder Do Kwon are asking a US court to limit their client’s prison term to five years following his guilty plea in a fraud case tied to the spectacular blowup of the Terra ecosystem, which obliterated $40 billion from crypto markets in 2022.
Do Kwon’s Lawyers Push For 5 Year Sentence
Kwon pleaded guilty in August 2025 to two counts of wire fraud and conspiracy to defraud stemming from the May 2022 implosion of Terraform Labs’ Terra ecosystem, which included algorithmic stablecoin TerraUSD and its counterpart Luna token.
As part of a plea deal, the US Department of Justice agreed to recommend a sentence of no more than 12 years. However, his legal team argued that anything longer than five years is “far greater than necessary” to achieve justice, given the punishment he has already served and the penalties he has agreed to accept.
In the 23-page memo filed on Nov. 26 in the U.S. District Court for the Southern District of New York, Kwon’s lawyers noted that he had spent nearly three years in prison, “with more than half that time in brutal conditions in Montenegro,” following his March 2023 detention for using forged travel documents before his extradition to the U.S. in December 2024.
“While the government’s offer to seek no more than a 12-year sentence accounts for these factors, it does not consider the totality of circumstances that support a sentence not greater than five years’ incarceration,” the memo reads.
 
Kwon also agreed to forfeit over $19 million along with several properties as part of the plea agreement with US prosecutors.
The memo attributes the 2020 collapse to coordinated trades by third-party companies exploiting vulnerabilities, citing academic papers and reports from blockchain sleuth Chainalysis. It also highlights Kwon’s failure to reveal a private arrangement with Jump Trading to buoy TerraUSD’s dollar peg in May 2021, which he now regrets as misleading investors about the project’s risks.
“Do’s criminal conduct was not motivated by personal greed or enrichment, but rather flowed initially from his ‘hubris’ and later from the desperation of a young founder who made serious mistakes while facing pressures he was ill-equipped to handle,” Kwon’s lawyers posited.
US District Judge Paul Engelmayer in Manhattan is slated to sentence Kwon on Dec. 11.
Notably, the fallen crypto star’s legal woes will not be over after this sentencing. There are still outstanding charges against Kwon in his home country, South Korea, where prosecutors are seeking up to 40 years behind bars.