• Do Kwon pleads guilty to conspiracy and wire fraud charges related to a $40 billion crypto collapse.
• He faces up to 25 years in prison, with a plea deal advocating for a maximum of 12 years.
• Kwon's actions manipulated the value of TerraUSD, misleading investors and causing significant financial losses.

Do Kwon, the South Korean cryptocurrency entrepreneur and co-founder of Terraform Labs, has pleaded guilty to conspiracy to defraud and wire fraud charges in a case tied to the estimated $40 billion collapse of TerraUSD and Luna in 2022. He entered his plea during a hearing at the Southern District of New York before U.S. District Judge Paul Engelmayer on August 12, 2025, after previously pleading not guilty to a nine-count indictment earlier this year, which included securities fraud and money laundering conspiracy charges, according to Reuters and SCMP.

As part of the plea agreement, Kwon admitted to misleading investors about the stability of TerraUSD, a so-called stablecoin that was supposed to maintain a value of $1. Prosecutors alleged that he falsely claimed that a computer algorithm named "Terra Protocol" was responsible for restoring the coin's value when it fell below its peg, while in reality, he arranged for a trading firm to buy millions of dollars in tokens to prop up the price artificially. This deception reportedly led to retail and institutional investors pouring funds into Terraform products, ultimately driving the value of Luna to $50 billion at its peak in early 2022, according to BBC and Al Jazeera.

He faces the possibility of up to 25 years in prison, though the prosecutor has indicated they will advocate for a sentence of no more than 12 years, contingent on Kwon's acceptance of responsibility for his actions. Judge Engelmayer has the discretion to impose a longer sentence, and Kwon is scheduled to be sentenced on December 11, according to BBC and Reuters.

In a court statement, Kwon expressed remorse, acknowledging that he made "false and misleading statements" about TerraUSD, stating, "What I did was wrong." Alongside the criminal charges, Kwon is also subject to a civil fine of $80 million and a ban on further crypto transactions, stemming from a larger settlement with the U.S. Securities and Exchange Commission (SEC), highlighting the significant repercussions of his fraudulent activities, according to Al Jazeera and Reuters.