Do Kwon, a key figure behind Terraform Labs, is expected to enter a guilty plea regarding two criminal charges in the United States linked to the high-profile failures of TerraUSD and Luna.
Do Kwon Likely to Face Jail Time After Confessing Role in $40 Billion Crypto Debacle
Sources at
Reuters reported
that Judge Paul Engelmayer of the U.S. District Court verified the upcoming plea during a hearing held in Manhattan. The charges encompass conspiracy to commit fraud and wire fraud.
As part of the plea arrangement detailed by prosecutors, Kwon will be unable to appeal any sentence of 25 years or less. Furthermore, if Kwon demonstrates genuine remorse and avoids further criminal activity, the prosecution will recommend a reduced sentence, potentially capping jail time at 12 years.
During the court proceeding, Judge Engelmayer confirmed Kwon’s agreement to the forfeiture terms. Kwon affirmed his willingness to accept the factual basis presented in the indictment, stating “I am, your honor.”
This guilty plea likely averts a lengthy trial, previously slated for January 2026. Sentencing is pending, and the charges carry the potential for substantial imprisonment.
AUSA Ravener: So the defendant could not appeal any sentence of 25 years or less. The agreement notes that if the defendant accepts responsibility and commits no new crime, the government will advocate for a term not to exceed 12 years
— Inner City Press (@innercitypress) August 12, 2025
Kwon, aged 33, had initially denied all accusations outlined in a nine-count indictment, which included securities fraud, commodities fraud, and conspiracy to commit money laundering.
Separately, the
trial of Roman Storm, another executive in the crypto space, remains unresolved. The jury failed to reach a consensus on specific charges against him.
The legal actions are rooted in the 2022 collapse of TerraUSD, an algorithmic stablecoin engineered to maintain a $1 value. According to Reuters, prosecutors contend that Kwon misled investors in 2021, falsely asserting the coin’s stability was achieved through an automated system.
Instead, it’s alleged that a clandestine agreement with a high-frequency trading firm artificially sustained the coin’s value. This manipulation purportedly fueled increased investment, inflating Luna’s total valuation to approximately $50 billion by April 2022.
Guilty Plea Potentially Closes Chapter on Major Crypto Fraud Case
TerraUSD’s failure to maintain its dollar peg in May 2022 triggered a parallel crash of the related Luna token (LUNC), which plummeted to zero. Investors collectively suffered losses estimated at $40 billion. Currently, the
LUNC price
is around $0.00006147, reflecting a 0.38% decrease in the past day.
The cascading effects of this collapse reverberated throughout the broader cryptocurrency market, contributing to a wave of bankruptcies and prompting heightened regulatory scrutiny worldwide.
In 2024, Kwon reached a settlement with the U.S. Securities and Exchange Commission (SEC), agreeing to pay $4.55 billion. This also included an $80 million civil penalty and a prohibition on participating in crypto transactions.
He has been in detention following his extradition from Montenegro, where he served time for document forgery stemming from his arrest with fraudulent travel documents.
This case represents a stark contrast to Kwon’s previous image as a celebrated figure in blockchain, whose project was once considered a flagship example of decentralized finance. The news of his expected plea has triggered strong reactions within the cryptocurrency community.
Following a
previous report
suggesting a potential guilty plea, Bloomberg analyst James Seyffart commented that the development signaled the likely cancellation of a trial for Luna/Terra and Do Kwon.
Looks like no trial for Luna / Terra and Do Kwon https://t.co/QvAyeFokbd
— James Seyffart (@JSeyff) August 11, 2025
Paul
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