Do Kwon of Terraform Labs Admits Guilt—Will He Be Extradited to Korea?

Cryptocurrency A to Z

Maximum Sentence of 130 Years

Likely Reduced to 12 Years

$19 Million in Asset Forfeiture

Sentencing Hearing in December

Inmate Transfer Application May Lead to Separate Trial in Korea

Do Kwon, founder of Terraform Labs, who was indicted in the United States on fraud charges related to the issuance of the cryptocurrencies Terra and Luna, has changed his stance and admitted guilt. The maximum possible sentence of up to 130 years is now expected to be significantly reduced.

According to the cryptocurrency industry on the 17th, Kwon admitted guilt to conspiracy to commit fraud and wire fraud during a hearing at the United States District Court for the Southern District of New York on the 11th. The United States Attorney's Office for the Southern District of New York intends to seek a maximum sentence of 12 years as part of a 'plea bargain.'

As part of the agreement, the forfeiture of $19 million and some additional assets was included. Previously, Kwon and Terraform Labs also agreed to pay a total of $4,470,000,000 in disgorgement and fines in a civil lawsuit brought by the United States Securities and Exchange Commission (SEC).

Additionally, if Kwon applies for the international inmate transfer program after serving half of his sentence, the United States Department of Justice will not oppose the request. As a result, there is a possibility that, after completing half of his sentence in the U.S., Kwon may be extradited to Korea to face a separate trial. Kwon is also under investigation in Korea for violations of the Capital Markets Act.

Kwon was arrested in 2023 in Montenegro for using a forged passport and, after a lengthy legal battle, was extradited to the United States in January of this year. Immediately after, the United States Attorney's Office for the Southern District of New York indicted him on eight charges, including securities fraud, wire fraud, commodities fraud, and conspiracy to manipulate the market.

Terraform Labs claimed to algorithmically peg Terra to $1, but there were suspicions that the contracted trading company artificially inflated the price. In May 2022, Terra lost its $1 peg and collapsed, causing its sister token Luna (LUNA) to plummet as well, wiping out billions of dollars in market cap in a short period. This event left numerous investors worldwide with losses and severely shook trust in the overall cryptocurrency market.

The sentencing hearing for Do Kwon is scheduled for December 11. The final sentence will be determined by the judge and could exceed the prosecution’s recommendation.

Kang Min-seung, BloomingBit Reporter minriver@bloomingbit.io