DOJ Seeks 12-Year Sentence for Do Kwon
The U.S. Department of Justice (DOJ) is pushing for a federal judge to impose a 12-year prison term on Do Kwon, the founder of the defunct cryptocurrency platform Terra, after he pleaded guilty to multiple charges this summer. This recommended sentence is the maximum allowed under a plea agreement reached with Kwon, who originally faced a possible 25 years in prison. In exchange for his guilty plea, which covered conspiracy to defraud and wire fraud, Kwon opted out of a jury trial, leading prosecutors to limit their request for punishment.
Arguments for a Stiff Sentence
In a legal document submitted this past Thursday, DOJ attorneys argued that a stiff sentence for Kwon is essential in order to prevent unjust disparities in sentencing when compared to other high-profile fraud cases, particularly drawing parallels with Sam Bankman-Fried, the founder of FTX. Bankman-Fried was convicted in a jury trial earlier this year on multiple fraud counts related to the collapse of his cryptocurrency exchange and subsequently received a 25-year sentence.
Prosecutors highlighted that both Kwon and Bankman-Fried engaged in significant fraudulent activities in their twenties and attributed their actions to youth and inexperience, which should not mitigate the severity of their punishments. Kwon, who is 34, gained notoriety in 2022 when his cryptocurrencies, UST and LUNA, collapsed in value, erasing over $40 billion from the market and triggering a major crisis that affected other firms including FTX.
Criticism of Kwon’s Defense
In their filing, the prosecutors criticized Kwon’s defense team for neglecting to reference Bankman-Fried’s case in their plea for a mere five-year sentence for Kwon. They argued that the difference in potential prison time is unjustified, particularly given the gravity of Kwon’s actions. The DOJ also countered the defense’s claim that Kwon should receive a lighter sentence than Alex Mashinsky, the founder of Celsius, who was sentenced to 12 years for his role in customer cryptocurrency mismanagement. They noted that Kwon’s offenses resulted in losses of $40 billion compared to Mashinsky’s $5 billion and called attention to Kwon’s flight from justice after being charged with using false identification, asserting that this should warrant a more severe sentence.
Background and Upcoming Ruling
Kwon was taken into custody in Montenegro last year following international arrest warrants from both U.S. and South Korean authorities, and after a complicated extradition process, he was sent to New York earlier this year. The ruling on his sentence is set to take place on December 11 in a Manhattan courtroom from U.S. District Judge Paul Engelmayer.
