TLDR

Do Kwon has pleaded guilty to conspiracy to defraud and wire fraud in the TerraUSD and Luna collapse case.
The plea agreement prevents him from appealing if the sentence is 25 years or less.
Prosecutors stated his sentence could be reduced to 12 years if he shows remorse and commits no new offenses.
The guilty plea ends the need for a trial that was scheduled for January 2026.
Do Kwon had previously denied all charges in a nine-count indictment.

U.S. prosecutors confirmed that Do Kwon, co-founder of Terraform Labs, will plead guilty to two criminal charges. The plea covers conspiracy to defraud and wire fraud in connection with the collapse of TerraUSD and Luna. The arrangement prevents Kwon from appealing if sentenced to 25 years or less.

Do Kwon Agrees to Plea Deal

During a Manhattan court hearing, U.S. District Judge Paul Engelmayer verified the plea agreement. He asked Do Kwon whether he signed the forfeiture agreement, and Kwon confirmed. The judge also asked if Kwon would accept not challenging the indictment’s factual claims, and he agreed.

Prosecutors stated the deal allows for a maximum of 12 years if Kwon shows remorse and avoids new offenses. They noted that the agreement spares the need for a lengthy trial scheduled for January 2026. The court has not set a sentencing date.

Do Kwon had previously denied all allegations in a nine-count indictment. The earlier charges included securities fraud, commodities fraud, and money laundering conspiracy. His guilty plea ends months of legal disputes between him and U.S. authorities.

Background of TerraUSD and Luna Collapse

The case centers on the 2022 crash of TerraUSD, an algorithmic stablecoin designed to maintain a $1 value. Prosecutors allege Do Kwon misled investors in 2021 by claiming stability was restored through automated protocols. They said the stability was actually maintained through a secret deal with a trading firm.

This alleged manipulation encouraged further investments, pushing Luna’s value to $50 billion by April 2022. When TerraUSD lost its peg in May 2022, Luna’s price collapsed to near zero. The collapse wiped out an estimated $40 billion in market value.

The incident triggered a chain reaction across the cryptocurrency market. Several major crypto companies filed for bankruptcy following the crash. The event also drew regulatory scrutiny from multiple countries.

Settlement and Current Status

In 2024, Do Kwon agreed to pay the U.S. Securities and Exchange Commission $4.55 billion in a settlement. The settlement included an $80 million civil fine and a ban on crypto transactions. Authorities said this financial penalty was one of the largest in SEC history.

Kwon has been in custody since his extradition from Montenegro. He served a sentence there for document forgery after using fake travel papers. His case contrasts sharply with his former prominence in decentralized finance.

The post Do Kwon Guilty Plea Ends Trial Over $40B TerraUSD and Luna Crash appeared first on Blockonomi.

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Filed under: Bitcoin - @ August 12, 2025 9:02 pm