Federal prosecutors in the United States have formally requested a 12-year prison sentence for Do Kwon, the founder of Terraform Labs. In a sentencing memorandum filed with the court, authorities argued that the scale of financial devastation stemming from the collapse of the Terra ecosystem in May 2022 surpasses the combined losses attributed to other high-profile crypto fraud cases. The document specifically cited the cases of FTX’s Sam Bankman-Fried, Celsius Network’s Alex Mashinsky, and OneCoin’s Karl Sebastian Greenwood for comparative purposes.
The recommendation underscores the profound market impact and investor losses triggered by the de-pegging of TerraUSD (UST) and the subsequent collapse of its sister token, LUNA. Prosecutors characterized the event as a catastrophic failure that eroded public trust and resulted in tens of billions of dollars in losses across the global cryptocurrency market. The legal filing frames the requested sentence as a necessary measure to reflect the severity of the misconduct and to serve as a deterrent. Do Kwon, currently detained in Montenegro, faces parallel legal challenges from the U.S. Securities and Exchange Commission (SEC) and awaits potential extradition.
