11.08.2025 22:18
Do Kwon, co-founder of Terraform Labs, will admit guilt on August 12th at 10:30 am ET in a Manhattan federal court, marking a dramatic turn in the multi-billion dollar crypto fraud case. This unexpected plea, filed by Judge Paul Engelmayer on August 11th, significantly alters Kwon's previous legal strategy, preempting the trial originally scheduled for January 26, 2026. The judge had previously encouraged plea negotiations, despite both sides initially preparing for a lengthy court battle.
Kwon faces serious federal charges stemming from the alleged orchestration of a cryptocurrency fraud scheme. Prosecutors contend this scheme resulted in over $40 billion in investor losses following the catastrophic collapse of the LUNA and TerraUSD tokens in May 2022. This event, described by authorities as one of history's largest cryptocurrency failures, sent shockwaves through global cryptocurrency markets. The U.S. Attorney's office has painted a damning picture of Terraform Labs' operations, characterizing them as fundamentally deceptive, even calling the company a “Potemkin village,” highlighting the inherent instability of its products and the alleged manipulative practices used to artificially maintain their value.
Kwon's guilty plea comes after a protracted effort to avoid prosecution. He spent nearly a year evading authorities before his arrest in Montenegro in March 2023. Using fraudulent travel documents, his attempt to remain at large ended with his capture by Montenegrin authorities. Subsequently, he fought extradition but was eventually transferred to U.S. custody, paving the path for these pending fraud charges to be resolved through his admission of guilt.
This case stands as one of the most substantial cryptocurrency fraud prosecutions ever undertaken by federal authorities, the staggering $40 billion in alleged losses placing it among the largest financial fraud cases in recent history. The upcoming guilty plea will undoubtedly have far-reaching consequences for the cryptocurrency industry and the regulatory landscape surrounding digital assets.
