The U.S. Department of Justice (DOJ) has formally asked a federal judge to sentence Do Kwon, the founder of Terraform Labs, to 12 years in prison—the maximum sentence allowed under the plea agreement Kwon signed earlier this summer.

Although Kwon could theoretically face up to 25 years behind bars, prosecutors agreed in August to cap their sentencing request at 12 years in exchange for Kwon:

Waiving his right to a jury trial

Pleading guilty to two felony charges:

Conspiracy to commit fraud

Wire fraud

Previously, Kwon’s legal team had requested a significantly lighter sentence of no more than five years.

⚖️ DOJ Compares Do Kwon to Sam Bankman-Fried

In its sentencing memorandum submitted to the court late Thursday evening, the DOJ argued that a stiff punishment is necessary to prevent “unwarranted sentencing disparities”—specifically referencing the case of Sam Bankman-Fried (SBF), founder of collapsed crypto exchange FTX.

SBF was convicted in 2023 on seven criminal counts related to fraud and conspiracy and was later sentenced to 25 years in prison.

> “Judge Kaplan imposed a 25-year sentence on Bankman-Fried—who, like Kwon, committed massive fraud in his twenties and partially blamed his conduct on youthful inexperience,” prosecutors wrote.

The DOJ emphasized that the difference in trial strategy—SBF choosing to go to trial while Kwon entered a plea—should not justify a 20-year gap in sentencing requests.

💥 A $40 Billion Collapse that Shook the Global Crypto Market

Now 34 years old, Do Kwon became the central figure in one of the largest financial disasters in crypto history in 2022, when:

TerraUSD (UST) lost its dollar peg

LUNA collapsed to near zero

The implosion wiped out over $40 billion in market value, triggering widespread contagion across the industry and contributing to the downfall of several major crypto firms—including FTX.

The collapse destroyed countless retail investors’ portfolios worldwide and permanently damaged trust in algorithmic stablecoins.

📈 Terra Tokens Explode After the Sentencing News

Following the DOJ’s sentencing request:

Terra (LUNA) surged approximately 35% in a single trading day

Terra Luna Classic (LUNC) skyrocketed nearly 80%

The sudden price surge reflects a familiar market pattern: speculation-driven rallies fueled by legal headlines, short squeezes, and aggressive retail momentum—despite no fundamental business recovery.

🧑‍⚖️ DOJ Rejects Comparisons with Celsius Founder Alex Mashinsky

Kwon’s legal team also attempted to justify a lighter sentence by comparing his case to Alex Mashinsky, the former CEO of Celsius.

Mashinsky was sentenced earlier this year to 12 years in prison for:

Misappropriating customer funds

Manipulating the price of the CEL token

However, the DOJ firmly rejected the comparison:

> “Mashinsky’s financial damage—approximately $5 billion—cannot be compared to Kwon’s estimated $40 billion in losses,” prosecutors stated.

According to the DOJ, the scale, global impact, and systemic risk of the Terra collapse make Kwon’s case uniquely severe.

✈️ Arrest, Fake Passport, and Extradition to the U.S.

Do Kwon was arrested in Montenegro in 2023 while attempting to travel using forged passports, only months after arrest warrants were issued in both the United States and South Korea.

After a prolonged legal battle over jurisdiction, Kwon was ultimately extradited to New York in early 2025, where he is now in federal custody.

📅 Sentencing Date Confirmed

Do Kwon is scheduled to be officially sentenced on: 🗓️ December 11, at Manhattan Federal Court

by Judge Paul Engelmayer

The ruling could become one of the most consequential legal precedents in crypto history.

✅ Final Thoughts

While Terra ecosystem tokens are experiencing sharp speculative rallies, the legal reality facing Do Kwon is growing increasingly severe. The DOJ’s firm stance, combined with historical precedents like SBF and Mashinsky, suggests that U.S. authorities are now committed to setting powerful deterrents for crypto-related fraud at the highest level.

The market may pump on headlines—but the courtroom tells a very different story.

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