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- Do Kwon is expected to plead guilty in the U.S. fraud case linked to the Terra blockchain collapse.
- He risks facing a maximum of 61 years in prison upon conviction of all nine charges.
Terraform Labs boss Do Kwon is set to plead guilty to a high-profile U.S. fraud case regarding the collapse of the Terra blockchain ecosystem. On Monday, court filings outlined that a change-of-plea hearing had been set on Tuesday, August 12, in the Southern District of New York.
CRYPTO IN THE COURTS: Do Kwon Set to Plead Guilty on August 12 So No Trial in January 2026 for Luna "Stablecoin" Meltdown – Inner City Press story: https://t.co/jS2iyy8EF3 Order on Patreon here https://t.co/VlT7YANxkt
— Inner City Press (@innercitypress) August 11, 2025
Kwon initially had pleaded not guilty to various felony charges but is now reported to have changed his decision after several months of negotiations with prosecutors and his legal counsel. The decision follows increased scrutiny of crypto executives under the law following a wave of market scandals over recent years.
U.S. prosecutors allege that Kwon and the Terra blockchain perpetrated a fraudulent scheme, including the LUNA token and stablecoin TerraUSD (UST) algorithmic stablecoin. The project succeeded quickly within the decentralized finance industry, reaching a market capitalization greater than $40 billion in April 2022.
When UST failed to maintain its peg to the U.S. dollar, the ecosystem collapsed, creating a knock-on effect that vaporized billions of investor assets. Law enforcement claims that Kwon has lied to citizens about the viability of projects and their future and has benefited personally.
The U.S. indictment entails nine criminal charges, such as securities fraud, commodities fraud, wire fraud, market manipulation, conspiracy to commit money laundering, and conspiracy to defraud. The charges are similar to those one South Korean has filed against Kwon, and both jurisdictions are aiming to prosecute the person.
The Terra collapse caused the decline of the entire market in 2022, and some lending services, including BlockFi and Genesis, had to declare bankruptcies. The impact was compounded when FTX imploded later that year, spreading the damage to what analysts termed “crypto contagion.”
Potential Sentencing and Plea Deal Implications
If Kwon is tried on all charges, Kwon could receive up to 61 years beyond the reach of U.S. federal law. The Guidelines provide the flexibility to consider the amount of financial loss, the number of victims, and the defendant’s role in the scheme in sentencing.
Penalties per charge may consist of up to 20 years on some wire fraud counts with financial institutions, up to seven years on securities fraud, commodities fraud, market manipulation, and money laundering conspiracy. The maximum for conspiracy to defraud is five years per count.
According to legal analysts, real punishment in a complex financial crime can be lower than statutory maximums, particularly when defendants plead guilty or accept responsibility or are first-time offenders. An open plea of guilty would put Kwon in a favorable position to be granted a lesser sentence, but any agreement would have to be approved by the court.
According to the court filings, Kwon and the prosecution team, led by interim U.S. Attorney Jay Clayton, had entered into productive dialogue with the defense team over the months. The specifics of a possible agreement are not disclosed, and it is not clear which concessions can be offered.
Broader Legal Context and Industry Impact
The anticipated change of plea by Kwon is less than a week after a federal jury in the same district convicted Tornado Cash co-founder Roman Storm of running an unlicensed money transmitting business. The decision highlighted how U.S. authorities increasingly paid attention to the crypto infrastructure and regulation.
Terraform Labs has previously settled independent civil charges with the SEC in the U.S. In 2024, the company settled, agreeing to pay nearly $4.5 billion in disgorgement, penalties, and prejudgment interest. That settlement resolved the SEC case against him but stopped short of providing criminal immunity to Kwon.
