Terraform Founder Pleads Guilty to $40 Billion Crypto Fraud Qubic Claims Over 50% of Monero Hashrate Spurring Security Fears Circle Shares Drop After 10 Million Secondary Share Offer Announced

Terraform Labs founder Do Kwon pleaded guilty on Tuesday to multiple fraud charges tied to the collapse of the firm’s $40 billion cryptocurrency ecosystem. The 33-year-old admitted in a Manhattan federal court to conspiring in commodities, securities, and wire fraud, as well as a separate wire fraud charge. As part of a plea deal, Kwon faces a maximum 12-year prison sentence, with sentencing scheduled for Dec. 11. He will also forfeit $19 million and surrender his stake in Terraform Labs and its tokens. The U.S. Department of Justice has labeled the case one of the most significant frauds in history. Terraform’s TerraUSD stablecoin, designed to maintain a $1 peg, lost its value in May 2022, causing massive losses for investors [1].

Meanwhile, Qubic, a blockchain project led by ex-IOTA co-founder Sergey Ivancheglo, has raised concerns by claiming it controls more than half of Monero’s global hashrate. If true, this would give Qubic the potential to reorganize blockchain history, censor transactions, and conduct double-spending attacks. While Ivancheglo described the move as a “stress test” for Monero, the broader community remains divided. A 51% attack—where one entity controls the majority of a proof-of-work network—has previously caused significant damage to networks like Ethereum Classic and Bitcoin Gold. Qubic’s “useful proof-of-work” model uses mining rewards to buy and burn its own tokens, contributing to its rapid rise in Monero’s hashrate. Monero’s RandomX algorithm was designed to resist ASIC dominance, but Qubic’s model has seen its share of Monero’s hashrate surge from under 2% in May to over 25% by late July [2].

In another market-moving development, Circle (CRCL) announced a secondary offering of 10 million shares, causing its stock to decline in after-hours trading. The company will sell 2 million shares of Class A common stock, while existing shareholders will offer another 8 million. Underwriters may also purchase an additional 1.5 million shares. This follows Circle’s recent IPO, where shares surged to a high of $299 from an initial price of $31. Despite Tuesday’s drop, the stock remains at nearly five times its listing price. The announcement came alongside the stablecoin issuer’s reported $428 million second-quarter loss, raising questions about its financial sustainability amid volatile market conditions [3].

These events highlight ongoing turbulence in the crypto sector, as regulatory scrutiny intensifies and technological innovations introduce new risks. Do Kwon’s guilty plea marks a major milestone in the legal reckoning of crypto’s past, while Qubic’s actions raise broader questions about network security and decentralized governance. Circle’s market response underscores the challenges faced by public crypto firms navigating a rapidly shifting landscape.

Sources:

[1] https://www.cryptocompare.com/email-updates/daily/2025/aug/13/