Do Kwon pleads guilty to conspiracy and wire fraud, faces up to 25 years in prison.

Do Kwon pleads guilty to conspiracy and wire fraud, faces up to 25 years in prison.

Do Kwon, the co-founder of Terraform Labs, has pleaded guilty to two federal fraud charges related to the 2022 collapse of the Terra and LUNA cryptocurrency ecosystem. The charges stem from the TerraUSD market crash, which caused an estimated $45 billion in investor losses. Kwon pleaded guilty to conspiracy to defraud and wire fraud, admitting to making false and misleading statements about the stability of the TerraUSD stablecoin [1].

The plea agreement, entered before Judge Paul Engelmayer in the U.S. District Court for the Southern District of New York, reduces the original nine-count indictment to two charges. Under the terms of the plea deal, Kwon faces a potential 12-year prison sentence if he continues to cooperate with prosecutors and avoids additional legal violations. The statutory maximum sentence for the charges is 25 years, split between five years for conspiracy and 20 years for wire fraud, but prosecutors have agreed to cap the recommendation at 12 years [2].

Kwon’s legal troubles began in March 2023 when he was arrested in Montenegro on suspicion of using fraudulent travel documents. After nearly four months in Montenegrin custody, he was extradited to the United States in January 2025. Prior to the guilty plea, he had pleaded not guilty to the charges and had fought extradition. His legal team had previously argued for leniency, citing his cooperation with investigations and efforts to return to the U.S. voluntarily [3].

The Terra collapse had a significant impact on the broader cryptocurrency market, triggering widespread sell-offs and raising concerns about the stability of algorithmic stablecoins. Prosecutors have argued that Terraform’s products were structurally unsound and required constant manipulation to maintain their value, which ultimately led to the catastrophic failure in May 2022 [4].

Kwon’s case has drawn comparisons to that of former FTX CEO Sam Bankman-Fried, who was sentenced to 25 years in prison in 2024 for similar charges. Observers note that Kwon’s guilty plea may reflect a strategic decision to avoid a potentially longer sentence in a judicial system that has demonstrated limited leniency toward high-profile crypto fraud cases [5].

The outcome of Kwon’s sentencing is expected to have broader implications for the cryptocurrency industry, signaling to market participants the legal and regulatory risks associated with fraudulent or misleading business practices. His guilty plea and the potential 12-year sentence will serve as a precedent for how the justice system handles crypto-related financial crimes [6].

References:
[1] https://www.coinspeaker.com/former-terraform-labs-boss-do-kwon-pleads-guilty-to-conspiracy-fraud-over-44b-crash/
[2] https://www.bbc.com/news/articles/c2kznpdvwwlo
[3] https://www.ainvest.com/news/kwon-pleads-guilty-fraud-40-billion-terra-collapse-2508-3/
[4] https://www.coinspeaker.com/former-terraform-labs-boss-do-kwon-pleads-guilty-to-conspiracy-fraud-over-44b-crash/
[5] https://www.coinspeaker.com/former-terraform-labs-boss-do-kwon-pleads-guilty-to-conspiracy-fraud-over-44b-crash/
[6] https://www.coinspeaker.com/former-terraform-labs-boss-do-kwon-pleads-guilty-to-conspiracy-fraud-over-44b-crash/