Bitcoin News Today: Do Kwon Pleads Guilty to TerraUSD and Luna Fraud in $40 Billion Collapse

Do Kwon, co-founder of Terraform Labs, has pleaded guilty to charges of conspiracy and wire fraud in connection with the $40 billion collapse of the TerraUSD stablecoin and Luna token in 2022. The plea was entered during a hearing in New York on August 12, 2025, under a deal with U.S. prosecutors that includes the forfeiture of $19.3 million and certain properties. Kwon, 33, appeared in court wearing a yellow prison jumpsuit and admitted to defrauding investors through misleading claims about Terraform’s blockchain technology and the stability of the stablecoin [1]. “I knowingly agreed with others to defraud, and did in fact defraud, purchasers of cryptocurrencies issued by my company, Terraform Labs,” he said, reading from a prepared statement. “What I did was wrong and I want to apologize for my conduct. I take full responsibility.” [2].

Kwon’s guilty plea avoids a criminal trial that had been scheduled for the following year before U.S. District Judge Paul Engelmayer. The case is part of a broader legal battle that began in 2023 when Kwon was indicted on nine charges related to the implosion of Terraform’s stablecoin ecosystem, which had a significant ripple effect across the cryptocurrency market [3]. Prior to his extradition to the U.S. in January 2025, Kwon had spent nearly two years in Montenegro, where he was arrested for using a fraudulent passport. He was eventually caught again in March 2023 while attempting to flee on a Dubai-bound jet [4].

The plea agreement limits the maximum sentence to 12 years, significantly lower than the 130 years he could have faced had the case proceeded to trial. Sentencing is set for December 11, with the possibility of Kwon serving part of his prison term in South Korea, provided he meets the conditions of the plea deal [5]. Prosecutors noted that the sentence would consider Kwon’s cooperation and the gravity of the fraud.

The U.S. Securities and Exchange Commission (SEC) had previously found Terraform and Kwon liable for civil fraud in a 2024 lawsuit. A jury in New York determined that Kwon and Terraform misled investors about the company’s blockchain use in a popular Korean payment app and about the stability of TerraUSD, which was falsely claimed to be algorithmically pegged to the U.S. dollar [6]. As part of that case, Terraform and Kwon agreed to pay $4.47 billion and dissolve the company.

Kwon’s guilty plea represents a significant legal milestone in the ongoing scrutiny of the crypto industry. His case highlights the consequences of deceptive practices in a market known for its volatility and lack of oversight. The plea is expected to set a precedent for accountability and reinforce the importance of transparency for investors [7]. With sentencing approaching, the case continues to shape the legal and regulatory landscape of the digital asset sector.

Source:

[1] The Verge – [https://www.theverge.com/news/758160/do-kwon-terraform-labs-guilty-plea](https://www.theverge.com/news/758160/do-kwon-terraform-labs-guilty-plea)

[2] Fortune – [https://fortune.com/crypto/2025/08/12/do-kwon-terra-guilty-plea-terrausd-terraform-labs/](https://fortune.com/crypto/2025/08/12/do-kwon-terra-guilty-plea-terrausd-terraform-labs/)

[3] NDTV – [https://www.ndtv.com/world-news/disgraced-crypto-mogul-do-kwon-pleads-guilty-to-fraud-over-40-billion-terraform-collapse-9072680](https://www.ndtv.com/world-news/disgraced-crypto-mogul-do-kwon-pleads-guilty-to-fraud-over-40-billion-terraform-collapse-9072680)

[4] AInvest – [https://www.ainvest.com/news/kwon-pleads-guilty-terrausd-luna-fraud-manhattan-court-2508/](https://www.ainvest.com/news/kwon-pleads-guilty-terrausd-luna-fraud-manhattan-court-2508/)

[5] dlnews.com – [https://www.dlnews.com/articles/regulation/do-kwon-pleads-guilty-to-fraud/](https://www.dlnews.com/articles/regulation/do-kwon-pleads-guilty-to-fraud/)

[6] Cointelegraph – [https://cointelegraph.com/news/do-kwon-guilty-fraud-terraform-labs](https://cointelegraph.com/news/do-kwon-guilty-fraud-terraform-labs)

[7] Bitcoin.com – [https://news.bitcoin.com/do-kwon-to-plead-guilty-in-40b-terra-luna-collapse/](https://news.bitcoin.com/do-kwon-to-plead-guilty-in-40b-terra-luna-collapse/)