Do Kwon to Plead Guilty in $40 Billion Crypto Fraud Case
- Keyword Financial
- 2 hours ago
- 4 min read
Introduction
Do Kwon, the co-founder of Terraform Labs, is expected to change his plea to guilty in a U.S. criminal case tied to the 2022 collapse of TerraUSD (UST) and LUNA, which wiped out roughly $40 billion in market value. A change-of-plea hearing has been set for August 12 at 10:30 a.m. in Manhattan federal court before Judge Paul A. Engelmayer. Kwon had previously pleaded not guilty in January after being extradited to the U.S., and he faces nine federal counts including securities fraud, commodities fraud, wire fraud, and money laundering conspiracy (Reuters, Bloomberg, The Defiant, BeInCrypto).
A guilty plea would avert a trial previously slated for January 2026 and could significantly reduce Kwon’s exposure compared to potential maximum sentences exceeding 100 years if convicted on all counts at trial. Reports indicate the court has instructed Kwon’s counsel to prepare a written allocution detailing his admission; sentencing would occur later. The expected plea caps a long legal saga: Kwon was arrested in Montenegro in March 2023 for passport fraud amid a U.S.–South Korea extradition tug-of-war and was ultimately extradited to the U.S. at the end of 2024. Separately, in April 2024 a U.S. civil jury found Kwon and Terraform Labs liable for fraud in an SEC case, followed by a settlement totaling roughly $4.47 billion in penalties and disgorgement (BeInCrypto | WIRED).
The Terra collapse—triggered when UST lost its dollar peg—sent shockwaves through crypto markets and contributed to a cascade of failures across firms exposed to the ecosystem. Prosecutors allege Kwon misled investors about UST’s stability and the robustness of Terraform’s technology and partnerships. A plea would mark another milestone in the post–2022 enforcement cycle following high-profile actions against industry figures, and could influence related civil actions and outstanding matters tied to Terraform’s downfall (WIRED | The Defiant).
