Possible Transfer After Serving Half of Sentence in the US
Criminal Act Allows for Sentence Reduction for Time Served Abroad
The "Terra-Luna crash" refers to the incident in which the prices of the digital asset "Terra" and its supporting digital asset "Luna," both issued in 2019 by Terraform Labs, co-founded by Do Kwon and Shin Hyunseong, plummeted starting in May 2022, causing massive losses to investors worldwide. Do Kwon promoted Terra as a "stablecoin" pegged securely to the US dollar, but it was later revealed that such a structure could not be sustained.
Just before the crash, in April 2022, Do Kwon left for Singapore and subsequently went into hiding. He later entered Montenegro via the United Arab Emirates (UAE) and Serbia. On March 23, 2023, he was arrested at a local airport in Montenegro after being caught attempting to board a chartered flight to Dubai, UAE, using a forged passport. Both South Korea and the United States requested his extradition while he was detained in Montenegro. After several reversals regarding the country of extradition, Montenegrin authorities ultimately decided to send him to the United States.
Investigations and lawsuits against Do Kwon have been conducted in both the United States and South Korea. The US Securities and Exchange Commission (SEC) filed a civil lawsuit against him, and in June 2024, Do Kwon agreed to pay approximately 4.678 billion US dollars (about 7 trillion Korean won) in disgorgement and penalties.
During the plea bargaining process, it was reported that US prosecutors agreed not to oppose Do Kwon's application for overseas transfer if he serves half of his sentence in the United States. As a result, there is speculation that he could be extradited to South Korea before completing his full sentence in the US.
The Seoul Southern District Prosecutors' Office obtained an arrest warrant for Do Kwon in September 2022 on charges including violations of the Capital Markets Act. If he is extradited to South Korea, it is highly likely that he will be indicted and stand trial. Dansung Han, then head of the Joint Financial Securities Crime Investigation Unit (Judicial Research and Training Institute, 32nd class), stated in an interview with foreign media that "if Do Kwon is indicted and convicted in South Korea, he could receive the longest prison sentence ever imposed for a financial crime in Korean history."
To date, the longest confirmed sentence for a financial crime in South Korea is 40 years in prison, handed down by the Supreme Court in July 2022 to Kim Jaehyun, the main perpetrator of the Optimus Fund fraud case, which caused damages amounting to about 1 trillion Korean won. The Act on the Aggravated Punishment of Specific Economic Crimes stipulates life imprisonment or at least five years in prison if the profits exceed 5 billion Korean won.
For this reason, Do Kwon's defense attorney in the US argued during the trial that "Do Kwon is also under investigation by South Korean prosecutors, raising concerns about double jeopardy," and requested leniency. However, Judge Paul Engelmayer stated, "I cannot speculate on what will happen in the South Korean courts."
If Do Kwon is tried again in South Korea after serving his sentence in the US, the sentence may be lower than initially expected. This is because Article 7 of the Korean Criminal Act stipulates that any sentence served abroad must be included in whole or in part when imposing a sentence in South Korea. However, the extent to which it is included is at the discretion of the presiding judge, so it is difficult to predict the final sentence even if he is retried in South Korea.
The first criminal trial for co-founder Shin Hyunseong has been ongoing at the Seoul Southern District Court for nearly three years.
An Jaemyung, Legal Times Reporter
※This article is based on content supplied by Law Times.
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