Do Kwon pleaded guilty to federal fraud charges in Manhattan court, with his sentencing set for Dec. 11.
As Inner City Press reported on Aug. 12, Kwon admitted he orchestrated a cryptocurrency scheme that prosecutors allege caused over $40 billion in losses when LUNA and TerraUSD tokens collapsed in May 2022.
His defense entered guilty pleas to conspiracy to defraud and wire fraud before Judge Paul Engelmayer at the Southern District of New York (SDNY) courthouse.
Kwon acknowledged making false statements about Terra’s operations and knew his statements were misleading investors.
He told the court:
“Between 2018 and 2022 in the SDNY and elsewhere I knowingly agreed to participate in a scheme to defraud purchasers of cryptocurrencies from my company, Terraform Labs. I made false statements about how the peg was restored, and the role of another firm. I knew my statements were false.”
The plea agreement stipulates financial penalties exceeding $19 million and establishes sentencing guidelines at 25 years imprisonment. Prosecutors agreed to recommend no more than 12 years if Kwon accepts responsibility and commits no additional crimes.
The charges carry a statutory maximum of 25 years, with conspiracy charges carrying five years and wire fraud carrying 20 years.
Judge Engelmayer scheduled sentencing for December 11 at 11 am, when Kwon will learn his final prison term for the Terra ecosystem fraud.
Terra ecosystem collapse and market impact
FatMan, a prominent figure in post-Terra collapse investigations, commented on the guilty plea outcome:
“Do Kwon’s guilty plea means he will most likely serve 15 to 20 years instead of the statutory maximum of 25. Prosecutors will recommend 12. This is some vindication after years of work. But make no mistake – Do Kwon is also becoming the fall guy for Jump [Crypto] and Kanav Kariya [former Jump Crypto president].”
Prosecutors allege Terraform’s products were inherently unstable and required ongoing manipulation to maintain their market value and stability.
The May 2022 collapse sent shockwaves through crypto markets, contributing to broader digital asset sell-offs that erased hundreds of billions in market capitalization.
Kwon’s capture followed nearly a year on the run after the Terra collapse. Montenegrin authorities apprehended him in March 2023 while he attempted to travel using fraudulent passport documentation.
Following his capture, Kwon fought extradition proceedings before ultimately being transferred to US custody.
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