- Do Kwon, co-founder of Terraform Labs, has pleaded guilty to wire fraud and conspiracy over the $60 billion Terra/LUNA collapse.
- He faces up to 25 years in prison, $19 million in penalties, and sentencing on December 11.
Do Kwon, co-founder of Terraform Labs, has pleaded guilty to two charges in the United States over the collapse of TerraUSD (UST) and the LUNA token. The plea marks a major development in one of the largest scandals in cryptocurrency history, which wiped out $60 billion in investor funds.
In Manhattan federal court, Kwon admitted to wire fraud and conspiracy to defraud. He said, “Between 2018 and 2022, I knowingly agreed with others to engage in a scheme to defraud, and did in fact defraud, purchasers of the cryptocurrencies issued by my company, Terraform Labs.”
Reduced Sentence and Financial Penalties
By changing his plea, Kwon now faces a maximum of 25 years in prison. Prosecutors are reportedly recommending no more than 12 years. He will also pay $19 million in financial penalties as part of the agreement. Previously, Kwon had pleaded not guilty to a nine-count indictment that included securities fraud, wire fraud, commodities fraud, and money laundering conspiracy.
Rise and Fall of Terra
Kwon created the Terra ecosystem with its flagship token LUNA and the algorithmic stablecoin TerraUSD. The project initially gained widespread attention and investment. However, UST lost its peg to the U.S. dollar, triggering the collapse of the ecosystem and causing massive losses across the crypto market.
Kwon had once publicly defended UST’s stability, even mocking critics on social media in 2021. “Have fun staying poor,” he tweeted at one user questioning the token’s reliability.
Extradition and Legal Proceedings
After the 2022 collapse, Kwon’s location remained unknown until March 2023, when Montenegrin authorities arrested him for attempting to travel to Dubai with falsified documents. He spent four months in Montenegrin prison before being extradited to the U.S.
In court, Kwon admitted to making misleading statements about why UST regained its peg, saying, “What I did was wrong and I want to apologize for my conduct.” His sentencing is scheduled for December 11 in Manhattan.
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