Do Kwon: US judge examines South Korea's role before sentencing

Pressure is mounting ahead of Do Kwon's upcoming sentencing in the United States as a federal judge examines how his convictions relate to ongoing cases in South Korea and Montenegro. The court is seeking clarity before deciding how long the Terraform Labs co-founder will remain in U.S. custody and whether his time abroad should be factored into the final sentence.

Court Considers Multi-Country Custody in Do Kwon Case

A hearing scheduled for Thursday follows Kwon's admission of guilt to two criminal charges related to the collapse of TerraUSD and Luna. Judge Paul Engelmayer asked both sides for more information about the pending charges against Kwon in South Korea and the possible sentences he could face once the U.S. sentence ends.

Kwon first appeared in a US court on January 2, 2025, pleading not guilty. He then admitted in August to wire fraud and conspiracy to defraud charges. His actions, prosecutors say, fueled a $40 billion collapse that shook the digital asset market and caused widespread losses among retail and institutional investors.

Prosecutors are seeking a 12-year prison sentence and $19 million in fines as part of the plea deal. His defense team, however, is asking for no more than five years of sentence.

A key issue for the judge is how the United States and South Korea will handle custody. It also raised questions about Montenegro, where Kwon served four months for using falsified travel documents in an extradition dispute. The judge asked whether both sides agreed that time spent in Montenegro should not be factored into a possible U.S. sentence.

Concerns stem from the possibility that Kwon could be transferred to South Korean authorities while serving a U.S. sentence. The judge said such a transfer could weaken the impact of the punishment handed down in New York.

South Korean case could earn him much longer sentence

Kwon's legal team responded that whatever the outcome in the United States, whether 12 years or time already served, he would be immediately returned to South Korean custody for pretrial detention.

A major part of court examination concerns the details of the case still open in South Korea:

• Kwon could face up to 40 years in prison under South Korean law.
• Prosecutors in Seoul filed charges in 2022 but have not detained him since Terra's collapse.
• The United States and South Korea have submitted extradition requests to Montenegro.
• South Korea continues to investigate others linked to Terraform.
• Authorities view Kwon as a central player in investor losses and market disruption.

Judge Engelmayer also noted that U.S. prosecutors accuse Kwon of causing losses greater than those linked to Sam Bankman-Fried, Alex Mashinsky and Karl Sebastian Greenwood combined. The latter three are serving lengthy federal sentences, strengthening the government's position in Kwon's case.

The rise and fall of Kwon remains one of the most dramatic stories in crypto. At Terra's summit in 2022, he was considered a major figure in the blockchain world. However, the collapse of TerraUSD sent shockwaves through the market, pushing several companies into bankruptcy and prolonging volatility for months.

Thursday's hearing could determine Kwon's next steps. South Korean officials say they plan to detain him once extradited, although the timeline depends on the structure of the U.S. sentence. His arrest in Montenegro in 2023 ended months of uncertainty over his whereabouts and set the stage for one of the crypto industry's most historic cases.