13.08.2025 15:01
Do Kwon, the South Korean entrepreneur and co-founder of Terraform Labs, confessed to orchestrating a massive cryptocurrency fraud, pleading guilty in a New York City court to charges of wire fraud and conspiracy. This plea agreement, reached after initially facing a significantly longer trial, caps his potential prison sentence at a maximum of 12 years. His sentencing is scheduled for December 11, 2025.
The charges stem from the spectacular collapse of TerraUSD (UST) and Luna, two cryptocurrencies developed by Kwon's company. This catastrophic event, resulting in an estimated $40 billion in investor losses, is now considered one of history's largest financial frauds. Prosecutors argued that Kwon deliberately misled investors in 2021, falsely portraying the Terra Protocol's ability to maintain UST's $1 peg. In actuality, he manipulated the market through covert purchases of UST by a high-frequency trading firm, artificially inflating its value.
Manhattan U.S. Attorney Jay Clayton condemned Kwon's actions, stating that he exploited the hype surrounding cryptocurrencies to execute a scheme of immense scale. Kwon's deceptive statements prompted widespread investment in Terraform products, boosting Luna's market capitalization to a staggering $50 billion in the spring of 2022. The subsequent collapse devastated both retail and institutional investors alike.
In a courtroom apology, Kwon acknowledged his culpability, admitting to making false and misleading statements concerning the UST re-pegging, and failing to reveal the trading firm's crucial role. While facing a potential 25-year sentence, he accepted responsibility as part of the plea bargain. His legal troubles extend beyond this criminal case; in 2024, he agreed to a $4.55 billion settlement with the U.S. Securities and Exchange Commission, including an $80 million civil penalty and a lifetime ban from cryptocurrency transactions. This conviction follows his extradition to the United States.
