Former Terraform Labs Boss Do Kwon Pleads Guilty to Conspiracy, Fraud Over $44B Crash

Do Kwon, the co-founder of Terraform Labs, has entered a plea of “guilty” on two counts related to the 2022 TerraUSD market collapse as part of a deal with US attorneys.

The former businessman had previously pleaded “not guilty” to both charges — one count of wire fraud and one of conspiracy to defraud — before coming to terms with the court. The deal, according to courtroom testimony from Aug. 12, as reported by Inner City Press, will see Do Kwon waive his right to trial on both counts, though he’s still awaiting trial for seven related charges.

All rise!
Judge Paul A> Engelmayer: I understand your client wishes to plead guilty to Counts 1 and 4 – is that correct?
Do Kwon's lawyer Patton: Yes.
Judge; Mr. Kwon?
Do Kwon: Yes, Your Honor.

— Inner City Press (@innercitypress) August 12, 2025

He now faces consecutive prison sentences of up to five years for the conspiracy charge and up to 20 for the fraud charge. Per the report, the prosecution agreed to recommend a 12-year prison sentence plus $19 million in fines in exchange for the guilty plea. Ultimately, however, the judge can issue any punishment within the court’s sentencing guidelines up to and including the full 25 years in prison.

$45 Billion Wipeout: How Terra’s Collapse Affected One Million Investors

Both charges stem from the Terra market crash that began on May 7, 2022, when the firm’s TerraUSD stablecoin became depegged from the US dollar and its cryptocurrency, LUNA, plummeted in value. In a matter of days, Terraform Labs lost nearly $45 billion in market capitalization and as many as one million people were affected.

According to the transcript, when Judge Paul Engelmeyer asked what he’d done that made him guilty, Do Kwon responded that between 2018 and 2022 he “knowingly agreed to participate in a scheme to defraud purchasers of cryptocurrencies” and that some of those defrauded were in the southern district of New York, where the case is being tried.

Sentencing on the two counts he’s pleaded guilty to is slated for Dec. 11, 2025. Assuming he maintains his not guilty plea for the remaining charges related to fraud and money laundering, he’s expected to face trial sometime in 2026.

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