Do Kwon pleads guilty to fraud in US after $40 billion cryptocurrency crash

South Korean entrepreneur and co-founder of Terraform Labs Do Kwon has pleaded guilty to two counts of wire fraud in the United States. His cryptocurrencies TerraUSD and Luna crashed in 2022, costing investors $40 billion.

Kwon, 33, pleaded guilty in a New York courtroom to conspiracy to commit wire fraud and wire fraud. That was part of a plea deal that would have sent him to prison for up to 25 years, but prosecutors agreed to recommend no more than 12 years if he pleaded guilty.

1. Kwon admitted to misleading investors in 2021 by claiming that the Terra Protocol algorithm had re-pegged TerraUSD to the dollar after a crash, when in fact he had hired a high-frequency trading firm to artificially prop up the price. This helped drive the market cap of the related cryptocurrency Luna to $50 billion by spring 2022.
2. Terraform Labs, registered in Singapore, developed TerraUSD as a stablecoin with a fixed exchange rate of $1. Its collapse in May 2022 was one of the biggest crashes in crypto history, undermining market confidence and triggering a wave of corporate bankruptcies.

In 2024, Kwon agreed to pay an $80 million fine and was banned from trading cryptocurrencies for life as part of a $4.55 billion settlement with the SEC. He was extradited from Montenegro in late 2024 and remains in custody. After serving half of his U.S. sentence, he can apply for extradition to another country.

Kwon’s guilty plea marks a turning point in a case that has come to symbolize the risks of an unregulated crypto market. His sentencing, scheduled for December 11, 2025, could set a precedent for future trials against crypto project executives accused of misleading investors.