Judge Seeks Key Answers Ahead of Sentencing for Terraform Labs Founder Do Kwon

A U.S. district judge overseeing the sentencing of Terraform Labs co-founder Do Kwon is demanding clarity on several critical issues before the hearing proceeds on Thursday, according to newly filed court documents. Judge Paul A. Engelmayer of the Southern District of New York submitted six detailed questions to both prosecutors and Kwon’s defense team, requesting responses by Dec. 10. His inquiries focus on the legal, logistical, and victim-related implications surrounding Kwon’s upcoming sentence for defrauding investors.

Engelmayer questioned whether victims of the multibillion-dollar Terra ecosystem collapse will be given an opportunity to participate in the sentencing process, noting the significant financial and emotional harm suffered when Terraform’s market value—once exceeding $50 billion—imploded during the 2022 crypto crash. The judge also raised concerns about international custody, specifically asking what assurances the U.S. would have if Kwon were transferred to South Korea to serve part of his sentence. He pressed for clarification on whether Kwon could avoid U.S. prison time entirely if extradited, given his pending criminal charges in South Korea.

Prosecutors are pursuing a 12-year prison sentence, emphasizing the scale of investor losses and the severity of Kwon’s alleged misconduct. In contrast, Kwon’s defense team has requested a five-year term. Engelmayer further asked whether the 17 months Kwon spent detained in Montenegro should count toward his U.S. sentence, and he sought details on the remaining legal exposure Kwon faces in South Korea.

Additionally, the judge requested information on how any victim-compensation process might work, including mechanisms for restitution, and whether Kwon would qualify for federal sentence-reduction credits or require supervised release after serving his term. These unanswered questions highlight the complex international legal landscape surrounding the former crypto executive, whose case remains one of the most significant in the aftermath of the 2022 crypto market downturn.