- Terraform Labs co-founder Do Kwon pleaded guilty in U.S. federal court to conspiracy to defraud and wire fraud, reversing an earlier not guilty plea.
- Prosecutors said he misled investors by claiming TerraUSD regained its $1 peg through its algorithm while concealing that a trading firm had intervened to support the price.
- Kwon will be sentenced on December 11 and faces up to 25 years in prison, although prosecutors will recommend no more than 12 years if he accepts responsibility.
- He has been in custody since his extradition from Montenegro in 2024 and continues to face criminal charges in South Korea.
Terraform Labs co-founder Do Kwon pleaded guilty on Tuesday to U.S. fraud charges over the 2022 collapse of his cryptocurrencies TerraUSD and Luna, which together erased about $40 billion in market value.
Kwon admitted in a Manhattan federal court to conspiracy and wire fraud, reversing an earlier not guilty plea. Prosecutors said he concealed that a trading firm had secretly bought large amounts of TerraUSD to support its $1 peg, while publicly claiming the stablecoin’s value was restored through its algorithm.
Sentencing is scheduled for Dec. 11. 2025, with Kwon facing up to 25 years in prison, though prosecutors will recommend no more than 12 years if he accepts responsibility.
How it all started
Kwon co-founded Singapore-based Terraform Labs, the developer of TerraUSD and its sister token Luna. TerraUSD was promoted as an algorithmic stablecoin designed to maintain a $1 value without holding traditional reserves.
The project began to collapse in May 2022 when TerraUSD lost its peg, triggering a sell-off that wiped out about $40 billion in value and rippled through global cryptocurrency markets.
Investigators in South Korea accused Kwon of fraud and securities violations, issuing an arrest warrant later that year. Meanwhile, Interpol placed him on a red notice, and he spent months evading authorities before being detained in Montenegro in March 2023 for travelling with forged documents.
Kown was extradited to the United States in late 2024 to face multiple criminal counts. In addition to Tuesday’s guilty plea, Kwon had already reached a $4.55 billion settlement with the U.S. Securities and Exchange Commission in 2024, which included an $80 million civil penalty and a ban on cryptocurrency activities. He also faces prosecution in South Korea.
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