Crypto tycoon Do Kwon admits guilt in American judicial proceedings
In a significant turn of events, Do Kwon, the founder of Terraform Labs, pleaded guilty on August 13, 2025, to multiple felony fraud charges related to the collapse of the TerraUSD stablecoin and Luna cryptocurrency. This marks a stark contrast to his initial not guilty plea following his extradition to the U.S. earlier in 2025.
The change of plea was formally addressed during a hearing at the Thurgood Marshall Courthouse in New York City. Kwon now faces nine felony counts stemming from his role in the TerraUSD ecosystem's collapse. His defense team has been preparing a narrative allocution for the court about the offenses as part of this process.
Prior to his guilty plea, Kwon and Terraform Labs were found liable by a U.S. jury in April 2024 for defrauding investors with crypto asset securities, following civil charges by the SEC that accused them of misleading investors and falsifying claims about the stability and use of their blockchain. In addition, Kwon agreed to a civil settlement in June 2024, paying an $80 million fine as part of a broader $4.55 billion SEC settlement with Terraform Labs.
As of August 21, 2025, no specific sentencing date has been publicly announced. The guilty plea hearing in mid-August suggests that sentencing will be scheduled by the court at a later date, following the plea agreement's finalization and any related judicial proceedings.
The collapse of TerraUSD and Luna, which led to losses of approximately $40 billion, is considered one of the recent controversies that have led to increased scrutiny of the cryptocurrency market. This case is a landmark prosecution in the cryptocurrency legal landscape and may influence future regulatory and criminal enforcement actions in the sector.
Terraform Labs, founded by Do Kwon, created a cryptocurrency called TerraUSD, which was marketed as a "stablecoin", a token pegged to stable assets such as the US dollar to prevent drastic fluctuations. Despite billions in investments, TerraUSD and its sister token Luna went into a death spiral in May 2022.
Do Kwon was arrested in March 2023 at the airport in Podgorica, Montenegro, and was later extradited to the United States in 2024. The high-profile collapses of exchanges like TerraUSD and Luna have contributed to the increased scrutiny of the cryptocurrency market.
Regardless of the outcome of the sentencing, the case serves as a reminder of the importance of transparency, accountability, and regulatory oversight in the rapidly evolving world of cryptocurrencies.
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