Do Kwon, co-founder of Terraform Labs, has pleaded guilty to two criminal charges in the TerraUSD and Luna collapse. He admitted to conspiracy to defraud and wire fraud during a court hearing in Manhattan in August 2025, according to Reuters. This marks a major development in the $40 billion Terra-Luna collapse case.
The plea deal prevents Kwon from appealing any sentence of 25 years or less. Prosecutors said if Kwon shows remorse and does not commit new crimes, they will ask for a prison term no longer than 12 years. U.S. District Judge Paul Engelmayer confirmed the plea during the hearing. When asked if he accepted the facts in the indictment, Kwon nodded and said, “I am, your honor,” according to Inner City Press.
He also apologized in court, stating, “I made false and misleading statements about why it regained its peg by failing to disclose a trading firm’s role in restoring that peg,” Kwon said. “What I did was wrong.”
Notably, Kwon’s guilty plea stops a trial that was planned for January 2026. The sentencing date is set for December 11. Before this, Kwon had denied all nine charges against him, including securities fraud, market manipulation, and money laundering conspiracy.
33-year-old Kwon had been arrested in Montenegro in 2023 after using fake travel documents. He served time there before being extradited to the U.S.
The case focuses on the 2022 crash of TerraUSD, a Stablecoin meant to keep a $1 value. Prosecutors say Kwon lied to investors by saying an automated system kept TerraUSD stable. Instead, they say a secret deal with a trading firm kept the coin afloat. This trick pushed more investments, growing Luna’s value to $50 billion in April 2022.
When TerraUSD lost its $1 peg in May 2022, Luna’s price fell to nearly zero, with Investors losing about $40 billion. The crash caused many crypto bankruptcies and drew global regulatory attention. Kwon agreed to pay the U.S. Securities and Exchange Commission $4.55 billion in 2024. He also paid an $80 million fine and accepted a ban on crypto trading.
This case is part of broader efforts in which the government holds crypto leaders accountable.
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