Terra Founder Seeks 5-Year Maximum Sentence in $40 Billion Fraud Case

According to Bijié Wǎng, Terraform Labs founder Do Kwon has asked a U.S. court to cap his prison sentence at five years. Kwon previously admitted guilt in a fraud case tied to the $40 billion collapse of the Terra-Luna ecosystem in May 2022. In a 23-page letter filed on November 26 with the U.S. District Court for the Southern District of New York, Kwon’s lawyers argued that a maximum of five years is sufficient, citing mitigating factors not fully considered in the government’s request for up to 12 years. The letter blamed part of the collapse on third-party firms exploiting vulnerabilities and referenced academic papers and Chainalysis reports. It also noted Kwon’s failure to disclose a 2021 secret agreement with Jump Trading to support UST’s peg, which he now regrets as misleading to investors. Kwon’s legal team emphasized that his actions were not driven by greed but by initial arrogance and later desperation under pressure. The letter also highlighted Kwon’s nearly two years of detention in Montenegro, including solitary confinement, after his arrest in March 2023 on a fake passport. He is set to be extradited to the U.S. by December 2024. Prosecutors in South Korea are seeking a 40-year sentence for the same charges. A sentencing hearing is scheduled for December 11.