Do Kwon Pleads Guilty to Fraud in TerraUSD Collapse Case

Do Kwon, co-founder of Terraform Labs, has pleaded guilty in a New York federal court to two charges of conspiracy and wire fraud related to the collapse of the TerraUSD (UST) and LUNA cryptocurrency ecosystem in 2022 [4]. The guilty plea, entered before Judge Paul Engelmayer, significantly reduces the potential consequences for Kwon, who previously faced up to 130 years in prison if convicted on all nine original charges [5]. As part of the plea agreement, seven of the nine charges have been dismissed, and Kwon is expected to face a maximum 12-year prison sentence if he cooperates fully [2].

Kwon admitted in court that his actions were illegal and expressed remorse, stating, “What I did was wrong, and I want to apologize for my conduct,” as he read from a prepared statement [4]. The plea agreement also includes a forfeiture of $19 million, with further restitution expected to be determined during a sentencing hearing scheduled for December [4]. In addition, Kwon previously agreed to pay an $80 million civil fine to the U.S. Securities and Exchange Commission (SEC) in 2024 [4].

The case highlights a broader trend in the enforcement of financial crime within the cryptocurrency industry. Authorities are increasingly holding individuals accountable for fraudulent practices that have led to massive financial losses for investors. The guilty plea and sentencing recommendation also underscore how cooperation and acceptance of responsibility can influence the severity of penalties in high-profile cases [4].

Market reactions to Kwon’s guilty plea remain uncertain, though the Terra Classic tokens could see further volatility. The case has drawn comparisons to other major cryptocurrency scandals, including those involving FTX and Binance, and reflects the growing regulatory scrutiny and legal consequences for misleading investors [4]. Experts suggest that the outcome may deter future instances of market manipulation and reinforce investor confidence through stricter enforcement [4].

Kwon’s cooperation also includes a provision allowing the U.S. government to transfer him to South Korea after serving half of his prison term, aligning with efforts to extradite crypto fugitives and ensure legal accountability in their home countries [4]. The next court date is scheduled for December, when Judge Engelmayer will determine the final prison term and restitution plan [4].

Source:

[1] Reuters, [https://www.reuters.com/legal/government/do-kwon-pleads-guilty-us-fraud-charges-40-billion-crypto-collapse-2025-08-12/](https://www.reuters.com/legal/government/do-kwon-pleads-guilty-us-fraud-charges-40-billion-crypto-collapse-2025-08-12/)

[2] CoinDesk, [https://www.coindesk.com/policy/2025/08/12/terraform-s-do-kwon-pleads-guilty-to-conspiracy-wire-fraud-in-ust-blow-up](https://www.coindesk.com/policy/2025/08/12/terraform-s-do-kwon-pleads-guilty-to-conspiracy-wire-fraud-in-ust-blow-up)

[3] The Wall Street Journal, [https://www.wsj.com/finance/currencies/crypto-entrepreneur-do-kwon-pleads-guilty-to-fraud-charges-stemming-from-crypto-crash-50c032fe?gaa_at=eafs&gaa_n=ASWzDAiCYiyZVDHE2zSDOQgaPYBofLjqxA5LfqZcXya4UzGi9WB584sL8BgC&gaa_sig=CN_gjEb2TgbQFfr1obvairIwbHjp6PPR69IodpfNRVskwaZTiZ5r35RE5EBogPfVvlT64L36jIRH1CmoZFTtTg%3D%3D&gaa_ts=689b9f9c](https://www.wsj.com/finance/currencies/crypto-entrepreneur-do-kwon-pleads-guilty-to-fraud-charges-stemming-from-crypto-crash-50c032fe?gaa_at=eafs&gaa_n=ASWzDAiCYiyZVDHE2zSDOQgaPYBofLjqxA5LfqZcXya4UzGi9WB584sL8BgC&gaa_sig=CN_gjEb2TgbQFfr1obvairIwbHjp6PPR69IodpfNRVskwaZTiZ5r35RE5EBogPfVvlT64L36jIRH1CmoZFTtTg%3D%3D&gaa_ts=689b9f9c)

[4] TheStreet, [https://www.thestreet.com/crypto/markets/terra-founder-do-kwon-pleads-guilty-to-fraud-charges](https://www.thestreet.com/crypto/markets/terra-founder-do-kwon-pleads-guilty-to-fraud-charges)

[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/)