Progress in the Terra case: Do Kwon faces heavy sentencing across countries, as U.S. judge fears extradition to South Korea may result in reduced sentence or even release

Terraform Labs co-founder Do Kwon is about to face his first criminal sentencing hearing in the United States, yet his cross-border legal entanglements remain unresolved. On the eve of sentencing, U.S. District Judge Paul A. Engelmayer issued a formal order requiring both the prosecution and defense to calculate the sentence in light of Do Kwon’s prosecution and detention in South Korea and Montenegro, and to provide detailed responses to six key issues, including transfer procedures and victim notification, before the sentencing hearing on December 11, 2025. This move indicates that the court is seeking to fully clarify Do Kwon’s judicial involvement across the United States, South Korea, and Montenegro before issuing a verdict.

The judge’s order requires both parties to submit written explanations by noon on December 10 and notes that certain facts must be determined before sentencing to facilitate an appropriate judgment. The U.S. government also previously encouraged the court in its sentencing memorandum to resolve factual disputes in advance, avoiding uncertainties during sentencing.

Court Concerned Whether South Korea Will Release Do Kwon Early

In the latest administrative order, Judge Engelmayer first asks both parties to disclose whether there has been any concrete progress in the charges Do Kwon faces in South Korea and whether there are any agreements or understandings with South Korean prosecutors. The judge specifically requests confirmation, in the event that South Korea ultimately prosecutes, tries, and convicts Do Kwon, of what the maximum and minimum sentences are, and whether those sentences could be served concurrently with or in addition to the U.S. sentence. These questions reflect the judge’s core concern: if the U.S. extradites Do Kwon back to South Korea, is there a risk that he could be released early due to differences in South Korean legal practices, thereby undermining the effectiveness of the U.S. sentence?

U.S. Judge Worried About Early Release and Sentence Credit Issues in South Korea

The questions raised by Judge Engelmayer reveal his concern that if Do Kwon is extradited to South Korea after serving his sentence in the U.S., he might be released early due to differing systems. He also inquires whether Do Kwon’s four months of detention and imprisonment in Montenegro for using a forged passport would not count toward his U.S. sentence. Do Kwon was previously detained in Montenegro over passport issues, and after more than a year of extradition disputes between the U.S. and South Korea, he was eventually extradited to the U.S. The judge’s review of whether this period should count toward his sentence shows his intention to avoid other countries’ detentions affecting Do Kwon’s actual time served.

Does the 21-Month Detention in Montenegro Count? Court Demands Clear Answers

In the second point of the order, the judge directly addresses the Montenegro detention issue. He requires both parties to clarify: Does the 21 months and 8 days that Do Kwon was detained in Montenegro in 2023–2024 count toward his U.S. sentence? Should the four months served for using a fake passport be excluded? Given the U.S. government’s promise “not to seek more than 12 years of imprisonment,” would the time detained in Montenegro extend Do Kwon’s total sentence in the U.S.?

These questions directly affect the exact length of time Do Kwon will ultimately serve in the U.S., making them critical points for both the prosecution and the defense to address.

Large Discrepancy Between Prosecution and Defense on Sentencing

There is a clear divide in sentencing recommendations. Do Kwon’s defense attorneys have requested a sentence of no more than five years, emphasizing that he did not act for personal gain or illegally misappropriate funds. However, U.S. prosecutors are seeking at least 12 years, highlighting the enormous losses suffered by global investors due to his actions.

DOJ Remission Process and Victim Compensation—Court Demands Clarification

In the third point of the order, the judge asks both parties to provide specific explanations regarding the Department of Justice’s “remission” process, including:

If victims file conflicting claims over forfeited assets, how will distribution be determined?

If the remission process is adopted instead of restitution, does the court need to issue an additional order to initiate the procedure?

Given the Terra collapse’s massive global investor impact and enormous losses, the court deems clarification of these procedures crucial.

The U.S. government’s sentencing memorandum notes that the losses caused by Terra’s collapse “far exceed” the combined losses of three major crypto fraudsters: former FTX CEO Sam Bankman-Fried, former Celsius CEO Alex Mashinsky, and OneCoin founder Karl Sebastian Greenwood. All three are currently serving lengthy sentences in U.S. federal prison.

First Step Act Sentence Credit Eligibility and the Need for Supervised Release

In the fourth issue, the court asks whether both parties agree that Do Kwon does not qualify for First Step Act Credits ( and supervised release sentence reduction eligibility.

If not eligible, by how much could his sentence increase?

If he might later be transferred to South Korea to serve his sentence, or be deported, does the U.S. court still need to impose supervised release?

This indicates the court is considering whether a supervised release order would retain legal significance if Do Kwon ultimately does not remain in the U.S.

From Star Founder to Global Fugitive: The Fall of Terra’s Founder

Before the collapse of the Terra ecosystem in 2022, Do Kwon was one of the most influential founders in the global blockchain industry. The Terra ecosystem he led, centered on the stablecoin UST and LUNA token, was considered a blueprint for the future of DeFi. However, in May 2022, UST lost its peg to the U.S. dollar, and the token’s price collapsed within days, with LUNA quickly going to zero. The crash devastated global markets, triggered massive liquidations, led to the collapse of several large institutions, and caused investor losses totaling tens of billions of dollars. It is widely regarded as the trigger for the 2022 crypto market crash. In the aftermath, regulators from South Korea, the U.S., and other countries launched investigations, and Do Kwon went from high-profile entrepreneur to global fugitive.

South Korea’s Strong Pursuit Means Cross-Border Trials Will Continue

Although Do Kwon will have his first U.S. criminal sentencing hearing this week, his legal battles are far from over. The South Korean government has made clear that even if he is first convicted in the U.S., he will still face formal trial and possible severe punishment upon returning to Korea. Judge Engelmayer’s series of questions—about whether South Korea will honor the U.S. sentence, the possibility of early release, and whether Montenegro detention counts—underscore the high uncertainty in this U.S.-Korea-Montenegro judicial standoff.

Global DeFi and Crypto Industry Await Final Verdict

As Do Kwon’s sentencing nears, global investors and crypto industry participants are closely watching the U.S. court’s final decision. Do Kwon’s case is seen as the most symbolic event of the 2022 “crypto crash cycle,” and his fate in some ways marks a major turning point for the industry from euphoria to regulation.

In the fifth point of the order, the judge asks for clarification of the specific impact of the U.S. prosecutors’ promise “to support prisoner transfer after Do Kwon serves half his sentence.” He directly asks: Should the court make a recommendation to the Federal Bureau of Prisons? If Do Kwon is transferred to South Korea to serve his sentence, how can the U.S. ensure that Korea will not release him early? This again reflects the U.S. court’s concerns about the Korean sentencing system, as it tries to clarify all cross-border judicial issues to avoid the final judgment being undermined by systemic loopholes. Regardless of the outcome of Do Kwon’s sentencing in the U.S. this week, whether he might receive a more favorable verdict if extradited to Korea remains a focus for the global DeFi community.

This article Terra Case Update: Do Kwon Facing Severe Cross-Border Sentencing, U.S. Judge Worried He’ll Receive Reduced Sentence or Release if Extradited to Korea first appeared on Chain News ABMedia.