In brief
- Do Kwon could face a separate criminal trial in South Korea if transferred there after serving part of his 15-year U.S. sentence.
- Korean prosecutors say a conviction under the Capital Markets Act could add decades more prison time, independent of the U.S. case.
- Cybercrime consultant David Sehyeon Baek said Korean victims could view U.S. punishment as potentially more meaningful than domestic outcomes.
Do Kwon’s legal troubles may be far from over.
South Korean prosecutors say disgraced crypto founder Do Kwon could still face a separate criminal trial at home, one that may carry decades more behind bars—even after receiving a 15-year prison sentence last week in the United States for his role in the $40 billion collapse of TerraUSD and LUNA in 2022.
The South Korean national may apply to the International Prisoner Transfer Program after completing half of his U.S. sentence, with American prosecutors agreeing not to oppose the request as part of his plea deal.
If extradited back to South Korea, Kwon would face charges including violations of the Capital Markets Act, potentially adding more than 30 years to his sentence.
"A guilty verdict in Korea could lead to a sentence of more than 30 years," a senior prosecutor told The Korea Times. "Prosecuting Kwon domestically would best serve efforts to compensate local victims."
The Seoul Southern District Prosecutors' Office obtained an arrest warrant for Kwon in September 2022. Korean authorities estimate roughly 200,000 victims in the country suffered losses totaling $204 million (300 billion won).
Kwon’s downfall
Kwon co-founded the Singapore-based Terraform Labs, which issued the TerraUSD stablecoin and sister token LUNA.
The company claimed Terra would maintain its peg with the U.S. dollar through Terra Protocol, but the system collapsed in May 2022, which led to a huge market contagion that led to other firms in the space shuttering and leaving investors with massive losses.
U.S. prosecutors later discovered that an investment firm contracted by Terraform Labs secretly purchased Terra to artificially prop up its price.
Kwon was arrested in Montenegro in March 2023 while attempting to travel with a forged passport. After a months-long extradition battle, during which Kwon pursued legal action seeking transfer to South Korea rather than the U.S. He was ultimately sent to the U.S. last December.
U.S. District Judge Paul Engelmayer sentenced Kwon to 15 years in prison on Thursday after convicting him on nine counts, including fraud and money laundering. While prosecutors sought 12 years, the court imposed a longer sentence and ordered forfeiture of $19 million in illicit gains.
During the process, the court received 315 victim impact letters detailing suicide, bankruptcy, and health crises in the aftermath of the collapse.
Sentiment in South Korea
"In Korea, there's actually a lot of sentiment among victims that seeing Do Kwon punished in the U.S. might be more meaningful than a domestic outcome," cybercrime consultant David Sehyeon Baek told Decrypt.
"That's because the Korean legal system is widely viewed as relatively lenient when it comes to large-scale financial crimes, even when the damage is massive,” Baek added. “When massive financial crimes are framed as ‘business failures’ instead of serious offenses, the message that comes through is tolerance, not accountability.”
Baek said Do Kwon could not credibly claim ignorance, telling Decrypt the risks were no longer theoretical and that Kwon understood a collapse would harm investors.
Pushing ahead regardless amounted to accepting that risk, he said, noting that “hoping it would work” does not erase awareness that it could fail.
“It has caused too much harm to people,” Baek said. “People are not guinea pigs.”