Will Do Kwon Land a Plea Deal or Is Luna Founder Heading for the Slammer?

Do Kwon, the founder of Terraform Labs, could face up to 130 years in prison if his legal team does not succeed in the upcoming United States legal drama.

Days after his extradition to the United States, Kwon appeared for the second time before the Southern District judge of New York on Wednesday, marking the start of the discovery phase.

In this stage, Judge Paul Engelmayer outlined the procedural path of the case. The trial date is scheduled for January 26.

Do Kwon’s Extradition and Charges in The US

For over two years following the collapse of the Terra platform in mid-2022, Kwon eluded authorities.

After being arrested in Montenegro in 2023, he was finally extradited to the United States.

However, it wasn’t straightforward. The decision came after much debate about whether he should face justice in his home country, South Korea, where he also faced criminal charges.

Ultimately, the federal case in the United States took priority, potentially presenting a pivotal moment for legal accountability in crypto.

The Collapse Of Terra, UST, and LUNA

The Terraform founder is accused of fraud following the collapse of TerraUSD (UST), an algorithmic stablecoin, and LUNA, the primary coin behind the Terra network.

In 2022, the collapse of UST and LUNA triggered a contagion, heaping more pressure on top coins, including Bitcoin and Ethereum. Bitcoin was among the coins that backed UST. The depegging of UST forced Kwon’s team to offload BTC in an attempt to re-peg UST to no success.

The implosion of UST and LUNA saw investors lose over $40 billion cumulatively. It also initiated a chain reaction that negatively impacted other crypto entities, including Genesis and 3AC.

This collapse affected hundreds of thousands of individuals and businesses, with estimates placing the number of victims at over one million worldwide. 

“While it is difficult to precisely quantify the number of Kwon’s victims in light of the sheer number of purchases and sales of Terraform’s cryptocurrencies and the manner of those transactions (with many transactions in those assets occurring on foreign exchanges and through digital asset wallet or crypto trading accounts without personal identifying information), the Government estimates that the number of victims in this case exceeds hundreds of thousands of individuals and entities, and potentially totals more than one million.”

United States prosecutors now claim that Kwon’s Terra ecosystem was built on lies and investor manipulation. For this reason, several charges, including nine felony counts, have been forwarded.

Kwon has pleaded not guilty to all charges.

DISCOVER: Will Do Kwon Face Extra Charges In The United States?

Will Kwon Negotiate A Plea Deal?

It remains to be seen how the case will be resolved.

While the trial date is January 26, the judge encouraged the prosecution and the defendant (Kwon) to consider plea negotiations. Since the door has not been slammed shut, there is room for settlement.

If there is a deal, it will spare the court time and resources. Otherwise, the trial will be lengthy and complex.

All the same, any negotiation would likely include an admission of guilt, mega penalties, and victim compensation. In return, Kwon may receive a reduced prison sentence – but is unlikely to escape unscathed.

If the trial proceeds without any negotiation, Kwon risks receiving a maximum sentence, which would mean spending the rest of his life behind bars. 

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Disclaimer

Crypto is a high-risk asset class. This article is provided for informational purposes and does not constitute investment advice. You could lose all of your capital.
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