Kwon admitted to committing fraud.
In a significant turn of events, Do Kwon, co-founder of Terraform Labs, has pleaded guilty to two counts of fraud related to the TerraUSD (UST) and LUNA collapse. The guilty plea came during a court hearing on March 28, 2023 [1][3][4][5].
Kwon admitted to conspiracy to commit commodities, securities, and wire fraud, as well as wire fraud. As part of the plea deal, he agreed to forfeit over $19 million in earnings and his interest in Terraform Labs and associated tokens.
The maximum statutory sentence for his charges is 25 years, but under the plea agreement, prosecutors will not recommend a sentence exceeding 12 years if Kwon complies with the terms. His sentencing is scheduled for December 11, 2025 [1].
In addition to the criminal charges, Kwon and Terraform Labs had already agreed to pay approximately $4.47 billion in disgorgement and penalties to the U.S. Securities and Exchange Commission (SEC) in a separate civil settlement [3].
The plea deal also allows for the possibility that, after serving half of his sentence in the U.S., Kwon could be transferred to South Korea to serve the remainder under an international prisoner transfer program, if he applies and complies with the conditions [3].
Court documents report that Kwon also admitted to making false and misleading statements [2]. This guilty plea marks a significant legal milestone in the crypto sector, highlighting increased regulatory enforcement and potentially influencing future stablecoin regulations and market transparency demands [4].
The collapse of TerraUSD (UST) and token LUNA in 2022 caused a crisis on the cryptomarket, resulting in investors' losses of tens of billions of dollars. In 2022, a South Korean court issued an arrest warrant for Kwon and five others for violating capital market laws [6].
In March 2023, Kwon was arrested in Montenegro while attempting to leave with forged documents [7]. After extradition to the U.S., charges were brought against him. At the hearing, Kwon was 33 years old [1].
Despite the legal proceedings, Kwon expressed satisfaction with his attorneys' representation [8]. The judge noted that he could impose a longer sentence than the one proposed by the Justice Department [1].
This development underscores the importance of transparency and accountability in the cryptocurrency industry, as regulators continue to scrutinize the sector for potential fraud and market manipulation.
[1] - New York Times [2] - Court Documents [3] - SEC Press Release [4] - CNBC [5] - Bloomberg [6] - Reuters [7] - BBC News [8] - Associated Press
Kwon agreed to forfeit over $19 million in earnings and his interest in Terraform Labs and associated tokens, which involves his financial involvement.
The maximum statutory sentence for Kwon's charges is 25 years, indicating that his legal consequences in the finance sector could be substantial.
