Terraform Labs Founder Do Kwon Will Plead Guilty to Fraud Charges
Do Kwon may plead guilty to US fraud charges over Terra’s $40 billion collapse, facing decades in prison unless a plea deal reduces his sentence.
Do Kwon, founder of Terraform Labs, will plead guilty on several felony charges, including fraud, conspiracy, money laundering, and more.
These charges, in total, could result in a maximum sentence of 100 years. It’s unclear whether he intends to make a plea deal or rely on the courts’ mercy.
A Potential Plea Deal For Do Kwon?
A court filing on August 11 revealed that Judge Paul A. Engelmayer scheduled a plea hearing for August 12 at 10:30 a.m. in Manhattan.
Kwon currently faces nine federal charges, including commodities fraud, securities fraud, wire fraud, and money laundering conspiracy. Prosecutors allege he misled investors about the stability of TerraUSD and LUNA, triggering a $40 billion market collapse in 2022.
If convicted on all counts at trial, Kwon could face more than 100 years in prison under US sentencing guidelines. The plea hearing suggests prosecutors and defense may have reached an agreement to avoid a lengthy trial.
Any plea deal could see Kwon admit to fewer charges in exchange for a reduced sentence. Such agreements often involve cooperation with authorities or a formal admission of wrongdoing in open court.
The court has instructed Kwon’s lawyers to prepare a written allocution detailing his admission of guilt. Once the plea is entered, sentencing would be scheduled for a later date.
The Most Shocking Collapse that Brought the Crypto Winter
Do Kwon co-founded Terraform Labs, the company behind the algorithmic stablecoin TerraUSD (UST) and its sister token LUNA.
In May 2022, UST lost its peg to the US dollar, triggering a rapid collapse that wiped out more than $40 billion in market value and sent shockwaves through the crypto sector.
Prosecutors allege Kwon misled investors about UST’s stability and the backing of the Luna Foundation Guard. He fled South Korea shortly after the crash and was arrested in Montenegro in March 2023 for passport fraud.
After legal battles over extradition, he was sent to the US in late 2024 to face federal charges.
In April 2024, Kwon and Terraform Labs were also found liable in a US civil case brought by the SEC, agreeing to a $4.47 billion settlement.
Disclaimer: The content of this article solely reflects the author's opinion and does not represent the platform in any capacity. This article is not intended to serve as a reference for making investment decisions.
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