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Prosecutors Demand 12-Year Prison Sentence For Terra’s Do Kwon

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Terraform founder Do Kwon faces a 12-year prison sentence as US prosecutors point out comparatively massive losses from the Terra collapse.

 

Terraform now sits at the centre of one of crypto’s biggest courtroom battles. Terraform founder Do Kwon now faces a 12-year prison sentence from US prosecutors. 

So far, Terraform investors and market watchers are now following this case as the sentencing date approaches.

Terraform Case Drives US Prosecutors to Seek 12 Years

US prosecutors recently filed a request in the Southern District of New York, asking the court to sentence Terraform cofounder Do Kwon to 12 years in prison for his role in the Terra collapse from 2022. 

For context, Terraform collapsed after its stablecoin system failed. Do Kwon attempted to flee, but was eventually arrested in Montenegro, before pleading guilty to wire fraud and conspiracy to defraud. 

Prosecutors argue that his actions caused massive financial damage, and have even stated that the damage from Terra’s collapse trumped that of others like Sam Bankman-Fried, Alex Mashinsky and Karl Sebastian Greenwood combined. 

That comparison alone has made the case a very serious one.

Terraform Collapse Shook the Crypto Market

Terraform triggered a market shock that still shakes the crypto space, years after the incident. The project was centred around the algorithmic stablecoin UST and the linked token LUNA.

UST aimed to hold a stable value without backing from traditional reserves and used a balancing link with LUNA. However, when confidence fell, the system broke.

LUNA once traded above $19, but dropped to under $1 in mere days. At one point, the Terra ecosystem even held more than $50 billion in market value.

This collapse was one of the incidents that fueled the harsh market collapse of 2022, which many investors still refer to as the “Crypto Winter”.

Terraform and Its Claims

Terraform gained trust through strong public messaging. Do Kwon promoted the products as reliable and decentralised.

However, court filings tell a different story. Prosecutors allege that Terraform relied on hidden trading activity. They also cited private deals that kept the system running behind the scenes.

US officials claimed that Kwon and his accomplices used fake metrics to create an appearance of the project being a successful one. These actions have been used to build the ongoing case against Kwon.

LUNA rose more than 40% in a single day after the filing became public, and its market price moved from about $0.07 to $0.10 within 24 hours. 

Terraform Defence Seeks Shorter Prison Time

Terraform’s lawyers have asked for a shorter sentence. The defence proposed a five-year term and pointed to the time that Kwon served in Montenegro as enough restitution.

They also raised the issue of South Korea, where Do Kwon could face another case in his home country. 

Defence filings also explained a likely chain of custody, where Kwon could leave a US prison only to enter an immigration facility and deportation could send him directly to Seoul.

Notably, South Korean courts could impose up to 40 years in prison, and that risk alone forms a major part of the defence request.

Related Reading: South Korea Charges Police Officers Amid Bribery Case With Illegal Crypto Exchanges

Terraform Compared to Other High-Profile Crypto Cases

Terraform now sits beside other major crypto crime cases. Sam Bankman-Fried, who led and caused the collapse of FTX received a 25-year prison sentence.

Alex Mashinsky, former CEO of Celsius, received 12 years in prison for misleading investors. Finally, Karl Sebastian Greenwood received a 20-year sentence for his role in the OneCoin scheme.

Prosecutors argue Terraform caused greater losses than all of these cases combined. That argument is what drives the request for a long prison term.

Source: https://www.livebitcoinnews.com/prosecutors-demand-12-year-prison-sentence-for-terras-do-kwon/