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Terraform's Do Kwon pleads guilty to conspiracy and wire fraud in UST collapse.
ByAinvest
Tuesday, Aug 12, 2025 4:50 pm ET1min read
Terraform's Do Kwon pleads guilty to conspiracy and wire fraud in UST collapse.
New York, Aug 12 (Reuters) - Do Kwon, the South Korean cryptocurrency entrepreneur behind the TerraUSD (UST) and Luna cryptocurrencies, pleaded guilty to two U.S. charges of conspiracy to defraud and wire fraud. The plea was made in a court hearing before U.S. District Judge Paul Engelmayer in New York.Kwon, who co-founded Singapore-based Terraform Labs, had previously pleaded not guilty to a nine-count indictment charging him with securities fraud, wire fraud, commodities fraud, and money laundering conspiracy. The charges stem from the 2022 collapse of the Terra/Luna stablecoin ecosystem, which lost an estimated $40 billion.
The entrepreneur admitted to misleading investors about the restoration of TerraUSD's peg in May 2021. Prosecutors alleged that he arranged for a high-frequency trading firm to secretly buy millions of dollars of the token to artificially prop up its price. This false claim drove investors to buy Terraform products, boosting the value of Luna to $50 billion by the spring of 2022.
Kwon faces up to 25 years in prison when Judge Engelmayer sentences him on December 11. The Manhattan U.S. Attorney's office has agreed to advocate for a prison term of no more than 12 years if Kwon accepts responsibility for his crimes. As part of the plea agreement, Kwon must pay a maximum forfeiture of $19.3 million, forfeit properties, and pay restitution.
In addition to the U.S. charges, Kwon also faces charges in South Korea. He has been detained since his extradition from Montenegro late last year and will be sentenced in Manhattan on December 11. Kwon's attorney confirmed that open charges remain against him in South Korea.
This development highlights the increasing scrutiny of the cryptocurrency industry by regulatory bodies worldwide. It is a significant milestone in the ongoing investigation into the collapse of Terra/Luna, one of the most high-profile cryptocurrency failures in recent history.
References:
[1] https://www.reuters.com/legal/government/do-kwon-pleads-guilty-us-fraud-charges-40-billion-crypto-collapse-2025-08-12/
[2] https://www.coindesk.com/policy/2025/08/12/terraform-s-do-kwon-pleads-guilty-to-conspiracy-wire-fraud-in-ust-blow-up
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