Do Kwon Pleads Guilty to Wire Fraud and Conspiracy Charges in TerraUSD Collapse Case
Terra and Luna co-founder, Do Kwon, admits guilt in a fraud case involving $40 billion
In a significant turn of events, Terraform Labs co-founder Do Kwon has pleaded guilty to two felony charges of wire fraud and conspiracy to defraud, marking the end of any possibility of a trial for the Luna/Terra case.
Summary of Charges and Plea Agreement
Kwon faced nine felony counts, including conspiracy to defraud, commodities fraud, wire fraud, securities fraud, market manipulation, and money laundering conspiracy, stemming from the collapse of the Terra/Luna stablecoin ecosystem, which lost approximately $40 billion in investor wealth.
On August 12, 2025, Kwon pleaded guilty to two charges: conspiracy to commit fraud and wire fraud. This guilty plea is part of a deal with the U.S. Department of Justice.
Agreed Plea Deal Details
The Department of Justice agreed to recommend a maximum sentence of 25 years, consisting of 20 years for the wire fraud charge and five years for the fraud conspiracy charge. The judge can order these sentences to be served consecutively or concurrently, replacing the original maximum sentence of 135 years if convicted on all counts.
As part of the plea agreement, Kwon must forfeit up to $19 million.
Other Legal Developments
In 2024, Kwon agreed to pay an $80 million fine to the U.S. Securities and Exchange Commission (SEC) as part of a broader $4.55 billion settlement involving Terraform Labs. This settlement was a significant step towards addressing the fallout from the Terra/Luna collapse.
However, the guilty plea does not resolve charges pending in South Korea, where Kwon still faces legal action.
Implications of the Plea
Kwon's decision to plead guilty marks a significant shift in his legal strategy, potentially setting a precedent for future crypto-related fraud cases in the U.S. James Seyffart, a Bloomberg analyst, put it best when he said, "Looks like no trial for Luna / Terra and Do Kwon."
The implosion sent shockwaves through crypto markets, triggering bankruptcies and intensifying global regulatory scrutiny. Kwon apologized for his conduct in court, admitting to making false and misleading statements about TerraUSD.
The sentencing date for Kwon is set for the 11th of December. Judge Paul Engelmayer officially approved Kwon's plea agreement on the 12th of August. As the legal saga continues, the crypto industry watches closely, hoping for a clearer regulatory landscape and a return to stability.
- Despite facing nine felony counts related to the Terra/Luna collapse, Do Kwon only pleaded guilty to two charges of wire fraud and conspiracy to defraud in a deal with the U.S. Department of Justice.
- The guilty plea, part of the plea agreement, involves Kwon forfeiting up to $19 million and potentially serving a maximum sentence of 25 years.
- The guilty plea resolves some charges in the U.S., but Kwon still faces legal action in South Korea.
- The events surrounding the Terra/Luna collapse, including Kwon's guilty plea, have intensified global regulatory scrutiny of the crypto market.
- The sentencing for Do Kwon is set for the 11th of December, and as the legal saga continues, the crypto industry is looking for a clearer regulatory landscape and a return to stability.
