Crypto Mogul Do Kwon Pleads Guilty in $40 Billion Fraud Case, Faces Up to 12 Years in Prison
- Posted on August 13, 2025
- International Relations
- By Arijit Dutta
- 89 Views
Terraform Labs co-founder Do Kwon pleaded guilty to fraud charges over the $40 billion TerraUSD collapse. Under a plea deal, he faces up to 12 years in prison, forfeits $19 million, and surrenders his crypto holdings. Sentencing is set for December 11 in Manhattan federal court.
Do Kwon, the South Korean cryptocurrency entrepreneur behind Terraform Labs, has pleaded guilty to two federal fraud charges in connection with the $40 billion collapse of his company’s digital asset ecosystem. Appearing in Manhattan federal court, the 33-year-old admitted to misleading investors about the stability and safety of TerraUSD, a so-called “stablecoin” designed to maintain a $1 value.
Under a plea agreement with prosecutors, Kwon faces a maximum sentence of 12 years in prison, significantly less than the roughly 25 years suggested by federal guidelines, provided he complies with all terms of the deal. Sentencing is scheduled for December 11.
The collapse of TerraUSD and its sister currency, Luna, in May 2022 erased tens of billions in market value, devastating investors worldwide. Prosecutors allege Kwon exploited the hype surrounding cryptocurrency technology to perpetrate one of the largest financial frauds in history.
Kwon was extradited to the United States from Montenegro in December 2024, following his arrest for traveling on a false passport. In addition to prison time, he has agreed to forfeit more than $19 million in assets and relinquish all interests in Terraform Labs and its cryptocurrencies.
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His attorney, Sean Hecker, said Kwon’s guilty plea reflects his acceptance of responsibility for making false and misleading statements to the Terra community. U.S. Attorney Jay Clayton emphasized the global impact of the fraud, noting that countless investors suffered massive losses as a result of the collapse.
The case is seen as a landmark in the ongoing push by U.S. authorities to hold cryptocurrency executives accountable for large-scale investor losses.
