Do Kwon Pleads Guilty to Terra Collapse Fraud, Faces Up to 25 Years

Generated by AI AgentCoin World
Tuesday, Aug 12, 2025 3:25 pm ET1min read
LUNA
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Aime RobotAime Summary

- Terraform Labs co-founder Do Kwon pleaded guilty to fraud charges over the $40B TerraUSD/LUNA collapse, admitting to conspiracy and wire fraud.

- Kwon faces up to 25 years in prison but prosecutors recommend no more than 12 years, with a $19.3M fine and asset forfeiture agreed.

- The 2022 collapse triggered global crypto market turmoil, including FTX's bankruptcy, and Kwon's guilty plea avoids trial risks while accepting full responsibility.

Do Kwon, co-founder of Terraform Labs, has pleaded guilty in a U.S. federal court to fraud charges related to the collapse of the TerraUSD (UST) and

LUNA
stablecoin ecosystems, which triggered one of the most severe financial crises in the cryptocurrency industry in 2022. The case, which resulted in a $40 billion market loss, has led to a sentencing hearing scheduled for December 11, 2025 [1].

During a hearing in New York, Kwon appeared in a yellow prison uniform and admitted to conspiracy and wire fraud charges. He also agreed to pay a $19.3 million fine and forfeit part of his assets. “I conspired with others to defraud buyers of cryptocurrencies issued by Terraform Labs, and I did so knowingly. This was wrong, and I apologize for my actions. I accept full responsibility,” Kwon said [2].

Under the terms of the plea agreement, Kwon could face a maximum sentence of 25 years if the court imposes the full punishment for the charges. However, prosecutors have agreed to recommend no more than 12 years in prison, provided he does not commit any new crimes. The conspiracy charge alone carries a maximum of five years, while wire fraud could result in a 20-year sentence [3].

Kwon was indicted in the U.S. in 2023 and captured in Montenegro after nearly two years on the run, using a fake passport. He was extradited to the U.S. in January 2025 and has since waived his right to a trial [5]. The plea deal allows for a resolution without a lengthy trial and avoids the possibility of a more severe sentence had the case proceeded to a jury trial [6].

The collapse of TerraUSD and LUNA in May 2022 caused a cascade of failures across the crypto market, contributing to the bankruptcy of FTX and triggering a global sell-off in digital assets. Kwon, who was also indicted in South Korea, has been a central figure in the legal aftermath of the crisis [7].

By pleading guilty, Kwon has effectively admitted to the central role he played in the fraud and the subsequent market turmoil. The plea agreement reflects a strategic move by both the defense and prosecution to secure a resolution without the unpredictability of a trial. However, the final sentence will depend on the discretion of the judge and the arguments made during the December 11 sentencing hearing [8].

Source:

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

[2] https://en.bitcoinsistemi.com/terra-luna-founder-do-kwons-prison-sentence-has-been-determined/

[3] 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=ASWzDAiKVTNRqZ6Tj1E6dGNeCZh32b6ZiMSiKQySZEeeWh4Wi4vjm83oFL2a&gaa_sig=G0pzV-TRWg9h1q2OnHncxx6nD_NMiPqhqmlywu3XVWKDDhbthF0cfFQhdnafbrY9vvfIccVpiDljTZCOADXyvg%3D%3D&gaa_ts=689b968b

[4] https://www.theverge.com/news/758160/do-kwon-terraform-labs-guilty-plea

[5] https://www.nytimes.com/2025/08/12/technology/do-kwon-crypto-fraud-guilty-plea.html

[6] https://www.law.com/newyorklawjournal/2025/08/12/lies-for-money-terraform-co-founder-do-kwon-pleads-guilty/

[7] https://www.ainvest.com/news/kwon-pleads-guilty-fraud-case-terra-collapse-2508/

[8] https://99bitcoins.com/news/altcoins/do-kwon-pleads-guilty-to-fraud-in-terra-usd-collapses-deal-cuts-150-years-to-25-years-sentence/