U.S. court sentences Terraform Labs founder to 15 years in prison

Source: BlockMedia Original Title: US New York Court Sentences Terraform Labs’ Do Kwon to 15 Years Original Link: https://www.blockmedia.co.kr/archives/1018710

Case Overview

The co-founder of Terraform Labs was sentenced to 15 years in prison in the Southern District of New York, charged with involvement in the large-scale cryptocurrency market crash in May 2022. The sentence exceeds the 12-year recommendation by prosecutors and is significantly longer than the 5-year proposed by defense attorneys.

Case Background

The defendant pleaded guilty in August to multiple charges, including:

• Conspiracy to commit commodities fraud
• Conspiracy to commit securities fraud
• Conspiracy to commit electronic fraud and related crimes

In court, the defendant admitted to intentionally participating in a fraudulent scheme to deceive buyers of Terra USD (UST) stablecoin.

Market Chain Reaction

The collapse of Terraform Labs triggered the 2022 crypto market crash, leading to widespread liquidations. Subsequently, in November 2022, a major exchange (FTX) declared bankruptcy, and its former CEO was sentenced to 25 years for fraud. Additionally, the founder of crypto lending platform Celsius Network was sentenced to 12 years in prison.

Sentencing Details

The defendant initially faced 9 charges, with a maximum of 135 years. After a plea agreement, the charges were reduced to 2, with a maximum sentence of 25 years. The judge ultimately sentenced him to 15 years, representing a moderate to heavy penalty.

Legal Issues Moving Forward

The defendant must serve more than half of his sentence before being eligible to apply for repatriation to his home country. The court expressed concerns about the risk of him not serving his sentence after repatriation, as prosecutors failed to provide clear guarantees.

The defendant was detained in Montenegro for 17 months, served 4 months for passport fraud, and was extradited to the US. These periods may be partially credited toward his US sentence.

The verdict involved multiple victims who testified in court or via phone, detailing the severe impact of the market crash on individuals and families.