Due to the collapse of the TerraUST stablecoin, Terraform Labs founder Do Kwon has been charged with nine counts including wire fraud, securities fraud, and commodity fraud. If convicted, he could face a 130-year prison sentence. The U.S. Federal Court in New York recently announced that it will hear the case on 1/26.
Court session will be held on 1/26, the judge encourages plea negotiations.
According to reports, the U.S. Federal Court in New York held a preliminary hearing on 1/8, where Judge Paul Engelmayer announced that the case would be heard on 1/26. Engelmayer emphasized that scheduling such a long trial period is quite rare in his career. However, considering the complexity of the case and that Do Kwon is involved in other international litigations, Engelmayer approved the defense attorneys to have more time to prepare for the trial.
The prosecution searches personal data and transaction records, with related data nearing several terabytes.
The prosecution also plans to obtain Do Kwon's email, Twitter, and other account access, as well as search warrants for related transaction records, and review Do Kwon's data from cryptocurrency exchanges. The prosecution noted that Do Kwon frequently expressed opinions on Twitter during the TerraUST collapse, and his last post appeared shortly before his arrest in 2023, which may become key evidence.
The prosecution revealed that the case evidence includes several terabytes of data, part of which was obtained from four mobile phones, audio recordings, and social media accounts taken from Do Kwon during his detention in Montenegro. Some audio recordings were made without Do Kwon's knowledge, and these recordings were made privately by non-government individuals. The prosecution emphasized that this data has also been used in the SEC's civil lawsuit against Do Kwon, which ultimately ruled that Do Kwon and Terraform were involved in wire fraud, securities fraud, and other charges.
International extradition struggles and new charges, securities law becomes key to the trial.
Do Kwon was arrested in Montenegro, Europe, in 2023, and after more than a year of extradition struggles, he was sent to the U.S. for trial at the end of 2024, but still faces related charges in South Korea. He faces nine felony charges including securities fraud, wire fraud, commodity fraud, and money laundering conspiracy. The prosecution pointed out that the ninth charge of money laundering was added in 2024, and they plan to apply to the Montenegro government for an exemption from the 'specific rule' in the extradition agreement to ensure that the charge is upheld.
Judge Engelmayer specifically pointed out that the applicability of securities law in this case will be crucial for the trial. He stated that the jury needs to clearly understand whether Terraform's crypto assets should be considered investment contracts. The prosecution cited a previous SEC ruling, determining that Terraform's assets fall under the category of securities, and requested that Terraform Labs pay a $4.5 billion fine to compensate the victims.
Will it be a plea negotiation or a lengthy trial?
Judge Engelmayer suggested that both the prosecution and defense consider plea negotiations to avoid prolonging the trial. According to documents submitted by the prosecution, the number of Do Kwon's victims may exceed hundreds of thousands, with impacts felt globally. The trial is expected to last six weeks, during which the prosecution may need four weeks to submit testimonies and evidence to the court. If convicted, Do Kwon could face a 130-year prison sentence.
(Do Kwon denies fraud charges: The cryptocurrency collapse case involving up to $40 billion is being heard in the U.S.)
This article reports that the U.S. court will re-examine Do Kwon on 1/26, and if convicted, he could face a 130-year prison sentence. Originally appeared in Chain News ABMedia.