Terra’s co-founder might serve up to 40 years in prison. After fleeing from regulators, Terra’s Do Kwon was finally arrested in Montenegro in March, Interpol confirmed. Both South Korean and U.S. prosecutors want extradition.
Dan Sung-han, the prosecutor in charge of the case, thinks that South Korea should have priority to deliver the best justice for investors whose money was wiped out due to the collapse of TerraUSD currency.
Previously, some legal experts suggested Kwon’s extradition to his homeland, citing that the crypto currency mogul is a Korean citizen and was first charged there.
The US is also vying for Kwon’s extradition. However, investors doubt the possibility of justice well served after the case of Sam Bankman-Fried. FTX’s former CEO is currently out on bail and residing with his family after extradition to the US. The decision stirred lots of criticism.
Bankman-Fried stands accused of multiple offenses, including conspiracy to defraud customers and lenders, securities fraud, merchandise fraud, money laundering, and conspiracy to violate financial laws.
If found guilty, Mr. Bankman-Fried could potentially face up to 115 years of imprisonment.
Do Kwon faces a 40-year sentence in Korea if convicted, according to The Wall Street Journal. Kwon may face an unprecedented sentence for a financial crime in South Korea, with the possibility of exceeding the 40-year term handed to Kim Jae-hyun, a hedge fund manager in Seoul.
In one of the largest fund fraud schemes in the country, involving investments exceeding $1.08 billion, Jae-hyun received a 40-year prison sentence, which was upheld by the Korean Supreme Court in July of last year.
Kwon’s detention in Montenegro was confirmed by South Korean authorities in March, and shortly thereafter, footage emerged on social media showing Kwon and Terraform CFO Han Chang-joon being led out of a Montenegrin court in handcuffs, which was widely viewed as incriminating.
The depegging of UST from its original value triggered a catastrophic decline in the cryptocurrency market, resulting in the destruction of over $60 billion in value.
According to local news reports, the number of Korean victims who suffered losses in this market crash has exceeded 200,000. Given the magnitude of this event, it is too significant to be overlooked, and its impact is felt across generations in South Korea.
Terraform Labs, the parent company of Terra, is based in Singapore, rather than South Korea. Nevertheless, the Terra project once enjoyed a high degree of esteem in the hometown of its founder, Do Kwon.
Mr. Kwon was once a prominent figure who garnered global attention and was looked up to as a role model for other cryptocurrency company founders in Korea.
The Korean government previously displayed support for cryptocurrencies. However, as cryptocurrency regulations in the country gradually grew more stringent, LUNA’s collapse further contributed to this trend. According to CoinDesk, political factors also played a role in the collapse of LUNA.
During the 2022 presidential election, all of the candidates included a crypto-friendly policy in their respective campaigns. Yoon Suk-Yeol, the current President of South Korea, pledged to limit taxes on cryptocurrencies and permit ICOs. President Yoon took office in May of that year, the same month in which Terra suffered a collapse.
As a consequence of LUNA’s collapse, investors incurring losses, and companies going bankrupt, the Korean government has been compelled to adopt stricter policies toward cryptocurrencies, thereby limiting its capacity to offer support.
Terra’s investors await the commencement of proceedings that would enable punishment on Do Kwon.
The amount of compensation that these customers will receive remains uncertain, although it is certain that the value of the client assets that have been lost amounts to several billion dollars.