Terraform Labs founder Do Kwon appears poised to change his plea to guilty in his U.S. criminal case involving allegations of fraud tied to the TerraUSD cryptocurrency.
On August 11, U.S. District Judge Paul Engelmayer of the Southern District of New York issued a court order indicating that Kwon had informed the court of a potential change in his plea. An urgent hearing has been scheduled for August 12 to address the matter.
The Terra-Luna collapse refers to the May 2022 crash of the Terra and Luna cryptocurrencies, which wiped out nearly $40 billion in market value.
Kwon faces charges including securities fraud, wire fraud, commodity fraud, market manipulation conspiracy, and money laundering. Prosecutors allege he misled investors about Terra’s blockchain technology and falsely claimed that the “Terra Protocol” algorithm would automatically stabilize the coin’s value. Instead, Kwon is accused of orchestrating secret purchases of Terra tokens by affiliated investment firms to artificially prop up the price.
Kwon was first indicted on eight counts following his arrest in Montenegro in March 2023. After his extradition to the U.S. late last year, prosecutors added money laundering conspiracy charges.
Initially, Kwon pleaded not guilty to all charges during his January arraignment. However, recent developments suggest he may be shifting toward a guilty plea.
If convicted on all nine counts, Kwon faces up to 130 years in prison, according to the Department of Justice.
