United States prosecutors have asked a judge in New York to give Do Kwon a twelve year prison sentence. He is the co founder of Terraform Labs and was at the center of the fall of TerraUSD and LUNA in the year twenty twenty two. That crash caused huge losses and hurt many people around the world. The request shows how serious the government views the case.
Prosecutors said the crash was one of the most damaging events in the history of crypto. They said the losses were even bigger than what happened in other major cases. They pointed to the scandals linked to Sam Bankman Fried Alex Mashinsky and the OneCoin scheme. They said the Terra collapse wiped out tens of billions and helped push the market into a long winter. They also said the speed of the crash and the size of the losses made this case different from the others.
They explained that TerraUSD was promoted as a stablecoin that would hold its value through an algorithm. Many people trusted it because they believed it was safe. But prosecutors say internal data showed it was weak and could break. They said Do Kwon and his team continued to present it as stable which made investors believe something that was not true. Once TerraUSD lost its peg the entire system broke down very fast and caused panic across the market.
Do Kwon’s lawyers asked the judge for a shorter sentence. They said he should receive no more than five years. They said he has already spent time in Montenegro during extradition events. They also said he might face more legal action in South Korea so giving him a long sentence in the United States would not be fair because he could be punished again somewhere else.
Prosecutors disagreed with this point. They said the size of the losses the damage to the market and the number of people affected were too large to reduce the punishment. They said the court needs to send a clear message that major fraud in digital assets will face strong action. They believe a long sentence is needed so that others understand the risk of misleading investors in a fast growing market.
The judge will study both sides and will give a final decision on the eleventh of December. The question of where Do Kwon will be sent is still not fully settled because his extradition remains unresolved. The United States has made it clear that they want him to stand trial under their laws.
This case shows a stronger and more serious approach toward failures in the crypto world. If the judge agrees with the request it could become one of the toughest punishments in this space. It also shows that when a collapse harms many people the system now expects those who led the project to face direct responsibility.
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