- Do Kwon pleads guilty to wire fraud, conspiracy charges in NYC court.
- Sentencing set for December 11, with plea deal limiting prison to 12 years.
- Terra collapse tied to $40 billion losses; Kwon remains in U.S. custody.
South Korean entrepreneur Do Kwon, co-founder of Terraform Labs and developer of the TerraUSD and Luna cryptocurrencies, has pleaded guilty to two counts of conspiracy to commit fraud and wire fraud, Reuters reports.
He had previously pleaded guilty in January to nine counts, including securities fraud and money laundering, with his trial initially set for January 26, 2026.
Prosecutors allege Kwon misled investors in 2021 by falsely claiming the Terra Protocol algorithm automatically re-pegged the TerraUSD stablecoin to $1 after a price drop. In reality, he orchestrated a covert purchase of the token by a high-frequency trading firm to artificially inflate its price.
"Do Kwon used the technological promise and investment euphoria surrounding cryptocurrencies to commit one of the largest frauds in history," said Manhattan U.S. Attorney Jay Clayton.
His false statements and actions prompted retail and institutional investors to buy Terraform products, pushing Luna’s market capitalization to $50 billion in spring 2022. However, the collapse of TerraUSD and Luna led to combined losses estimated at $40 billion.
In court, Kwon apologized: "I made false and misleading statements about the reason for the re-pegging without disclosing the role of the trading company in this process. What I did was wrong."
The verdict is slated for December 11, 2025.
While the maximum sentence is 25 years, prosecutors agreed to recommend no more than 12 years if Kwon fully admits responsibility.
In 2024, he agreed to pay an $80 million civil penalty and was banned from cryptocurrency transactions as part of a $4.55 billion settlement with the US Securities and Exchange Commission.
Following his extradition from Montenegro in late 2024, Kwon is in U.S. custody but will also face trial in South Korea.
His extradition was initially complicated by multiple appeals and lawsuits. The Montenegrin Court of Appeal overturned the extradition decision in March 2024, but U.S. representatives planned to appeal, while Montenegro’s Prosecutor General’s Office sought to reverse the ruling.
Related Legal Cases Highlight Growing Crypto Industry Scrutiny
Do Kwon’s guilty plea is part of a broader wave of legal actions targeting major figures in the cryptocurrency industry. Similar high-profile trials have sent strong signals about regulatory enforcement and accountability. For instance, former FTX CEO Sam Bankman-Fried was sentenced to 25 years in prison in 2024 after being found guilty of a range of fraud charges related to the collapse of his exchange.
Additionally, Roman Storm, co-founder of the Tornado Cash cryptocurrency mixer, was recently convicted of operating an unlicensed money transfer service and is awaiting sentencing. These cases, alongside Kwon’s, highlight increasing government efforts to clamp down on fraudulent and illicit activities in the crypto sector, emphasizing the need for greater transparency and investor protection in a rapidly evolving market.
This trend underscores the growing risks for crypto entrepreneurs and the strengthening legal framework surrounding digital assets.
