13.08.2025 11:17
Do Kwon, the 33-year-old South Korean entrepreneur behind the collapsed Terra ecosystem, has admitted guilt on charges of conspiracy to defraud and wire fraud in a Manhattan federal court. This plea follows a tumultuous period marked by the spectacular implosion of his cryptocurrency project, resulting in approximately $40 billion in losses for investors in 2022. The guilty plea concludes a saga that began with his initial not-guilty plea to a nine-count indictment in January, encompassing charges of securities fraud, wire fraud, commodities fraud, and money laundering conspiracy.
Kwon's confession centers around his deceptive actions concerning the stability of TerraUSD, a stablecoin he co-created with Terraform Labs. Specifically, he acknowledged misleading investors about the mechanisms maintaining TerraUSD's dollar peg. Prosecutors revealed that when the peg faltered in May 2021, Kwon concealed the use of a high-frequency trading firm to surreptitiously purchase millions of dollars' worth of TerraUSD, artificially propping up its value. This clandestine manipulation maintained investor confidence and fueled further investment in Terraform products, ultimately inflating Luna's market capitalization to a staggering $50 billion.
As part of a plea agreement, Kwon faces a maximum sentence of 25 years in prison, though prosecutors will seek no more than 12 years. This agreement comes alongside a separate $80 million civil fine resulting from a settlement with the SEC, which had estimated investor losses at $4.55 billion. In a court appearance, Kwon expressed remorse for his actions, explicitly stating that his misleading claims about TerraUSD's algorithmic stabilization concealed the crucial role played by the secret trading firm. He accepted full responsibility for deceiving investors with these false and misleading statements.
The sentencing of Do Kwon and the accompanying financial penalties set a significant legal precedent for the cryptocurrency industry. The case highlights the severe consequences of deceptive practices and underscores the importance of transparency and accountability in the rapidly evolving world of digital assets. This outcome, derived from information gleaned from internet sources, significantly impacts the future regulatory landscape and the ongoing discourse surrounding cryptocurrency legitimacy.
