Do Kwon, the co-founder of the failed cryptocurrencies TerraUSD and Luna, has admitted guilt in a US court over one of the largest frauds in crypto history, according to a Department of Justice press release. His plea comes more than two years after the spectacular collapse of his blockchain empire.
Do Kwon Pleads Guilty to Fraud in $40 Billion Terra-Luna Collapse
13 August 2025 - 17:18 CEST
From crypto visionary to collapse
Kwon, a South Korean national, co-founded Singapore-registered Terraform Labs, which launched the algorithmic stablecoin TerraUSD and its sister token Luna. In May 2022, TerraUSD lost its peg to the US dollar, wiping out some $40 billion in value and triggering a chain reaction across the digital asset market.
Prosecutors say Kwon, 33, and his company misled investors by claiming an algorithm maintained the peg, when in fact it was propped up by undisclosed trading firm interventions.
Flight, arrest and return to the US
After the collapse, Kwon became a fugitive, evading authorities for months before being arrested in Montenegro in March 2023 while using falsified travel documents.
Following extradition proceedings, he was brought to the US in January 2025 and initially pleaded not guilty to a nine-count indictment.
Separately, in June 2024, Terraform and Kwon agreed to more than $4.5 billion in US SEC (Securities & Exchange Commission) civil remedies, including an $80 million civil penalty against Kwon and other monetary relief. As part of the settlement, Terraform agreed to wind down and stop selling crypto-asset securities.
A calculated plea
On Tuesday 12 August, in a Manhattan federal court, Kwon pleaded guilty to two counts: one of conspiring to commit commodities, securities and wire fraud, and one of wire fraud, as part of a deal that reduced the charges.
Prosecutors have agreed to recommend a sentence of no more than 12 years, far below the maximum of 25 years, in exchange for his admission and the forfeit of more than $19 million. Sentencing is set for 11 December before Judge Paul Engelmayer.
Kwon also faces legal proceedings in South Korea. US prosecutors said they would not oppose a transfer abroad after he serves half of his US sentence. His guilty plea marks the end of years of defiance and the downfall of one of crypto’s most high-profile figures.
