Kwon admits to committing fraud.
Do Kwon, the co-founder of Terraform Labs, has admitted guilt to two federal fraud charges related to the collapse of TerraUSD (UST) and LUNA in 2022. The charges, which include conspiracy to commit fraud and wire fraud, were brought against Kwon after his extradition to the United States from Montenegro in March 2023, where he was arrested while attempting to leave with forged documents.
The sentencing for these crimes is scheduled for December 11, 2025, before Judge Paul Engelmayer at the Southern District of New York. Kwon faces a statutory maximum sentence of 25 years in prison. However, the Manhattan prosecutor's office has agreed to seek a sentence of no more than 12 years, provided Kwon accepts responsibility and refrains from committing any additional crimes during the period leading up to his sentencing.
As part of his plea agreement, Kwon has agreed to forfeit over $19 million in proceeds from his illegal schemes, including his interest in Terraform Labs and its associated cryptocurrencies. The collapse of TerraUSD and LUNA in May 2022 resulted in losses of over $40 billion, impacting thousands of investors worldwide.
During the hearing, Kwon, who was 33 years old at the time, expressed satisfaction with his attorneys' representation, apologised for his actions, and confirmed that he was aware and agreed to the waiver of his right to a jury trial. The judge noted that he could impose a longer sentence than the one proposed by the DOJ.
This guilty plea marks a significant development in efforts to hold individuals accountable for large-scale cryptocurrency frauds. In 2022, a South Korean court issued an arrest warrant for Kwon and five others for violating capital markets laws. It is yet to be seen what further consequences Kwon will face as a result of his actions.
[1] Source: Department of Justice press release, 2023 [2] Source: Bloomberg, 2023 [3] Source: The Wall Street Journal, 2023
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