Do Kwon, once hailed as one of the brightest minds in blockchain innovation, has admitted guilt to two U.S. charges — conspiracy to defraud and wire fraud — in a case that has become one of the largest fraud prosecutions in cryptocurrency history. The 33-year-old South Korean entrepreneur co-founded Terraform Labs, a Singapore-based firm behind the digital currencies TerraUSD and Luna, which collapsed in 2022, wiping out an estimated $40 billion in market value.
Kwon had initially pleaded not guilty in January to a nine-count indictment that included securities fraud, commodities fraud, and money laundering conspiracy. The charges stemmed from allegations that he misled investors about TerraUSD’s stability, a so-called “stablecoin” designed to hold a constant $1 value.
Prosecutors said that when TerraUSD lost its peg in May 2021, Kwon assured investors the loss was temporary and had been corrected by the “Terra Protocol,” an algorithm supposedly capable of restoring its price automatically. In reality, investigators revealed, Kwon had enlisted a high-frequency trading firm to secretly purchase millions of dollars’ worth of TerraUSD, artificially propping up its value. This deception, along with other misleading statements, drove new investment into Terraform’s products and inflated Luna’s market capitalization to nearly $50 billion by early 2022.
In court, Kwon acknowledged his misconduct. “I made false and misleading statements about why [TerraUSD] regained its peg by failing to disclose a trading firm’s role,” he told U.S. District Judge Paul Engelmayer. “What I did was wrong.”
Under the plea agreement with the Manhattan U.S. Attorney’s Office, prosecutors will recommend a sentence of no more than 12 years if Kwon fully accepts responsibility, although he faces a statutory maximum of 25 years. Sentencing is set for December 11. He has already agreed to pay an $80 million civil fine and accept a ban from participating in any crypto transactions, part of a broader $4.55 billion settlement with the U.S. Securities and Exchange Commission.
Kwon’s legal troubles are not confined to the United States. He faces separate criminal charges in South Korea, where authorities allege violations of capital markets laws. As part of his U.S. plea deal, prosecutors will not oppose his application for transfer abroad after serving half his sentence, should South Korea pursue his extradition.
The case against Kwon is part of a broader crackdown on cryptocurrency executives following the market downturn of 2022, which saw the collapse of several major digital asset firms. Authorities have made clear that the promise of blockchain innovation cannot be used as a shield for deceitful conduct.
Manhattan U.S. Attorney Jay Clayton underscored the gravity of the offense: “Do Kwon used the technological promise and investment euphoria around cryptocurrency to commit one of the largest frauds in history.”
Kwon has been detained since late 2023, following his extradition from Montenegro. Once celebrated as a disruptor capable of redefining global finance, he now stands as a cautionary tale of hubris, unchecked ambition, and the perils of operating in an under-regulated frontier. His downfall signals that even in the fast-moving, hype-driven world of crypto, accountability is catching up.