In a significant development within the cryptocurrency sector, Do Kwon, the South Korean entrepreneur behind the failed digital currencies TerraUSD and Luna, is set to plead guilty to multiple charges related to a staggering $40 billion collapse in 2022. During a recent court hearing in the United States, US District Judge Paul Engelmayer announced that Kwon will formally enter his plea on Tuesday, marking a critical turn in a case that has drawn substantial attention from both regulators and investors alike.
At the age of 33, Kwon co-founded Terraform Labs, a Singapore-based company that developed both TerraUSD, a stablecoin designed to maintain a value of $1, and Luna, a more traditional cryptocurrency. The collapse of these currencies has had a profound impact on the cryptocurrency market, particularly in 2022 when a drastic slump in digital token prices led to the failure of numerous crypto-related companies.
Kwon was initially indicted in January 2025, facing a nine-count indictment that included charges of securities fraud, commodities fraud, wire fraud, and a conspiracy to commit money laundering. Prosecutors allege that Kwon misled investors in 2021 regarding the stability of TerraUSD. Notably, he purportedly claimed that a computer algorithm known as the “Terra Protocol” had effectively restored the coin’s value when it fell below its designated peg in May 2021. In reality, Kwon allegedly orchestrated a scheme involving a high-frequency trading firm to secretly purchase millions of dollars worth of the token, artificially inflating its price.
The fallout from these deceptive practices was significant, as the false claims made by Kwon reportedly encouraged both retail and institutional investors to purchase Terraform products. This activity contributed to a dramatic increase in the value of Luna, which peaked at $50 billion in early 2022, further exacerbating the impact of the eventual collapse.
In a related development, Kwon reached an agreement in 2024 to pay an $80 million civil fine and accept a ban from engaging in crypto transactions. This settlement was part of a larger $4.55 billion resolution with the Securities and Exchange Commission (SEC). Following his extradition from Montenegro late last year, Kwon has remained in detention while facing these serious charges.
The case against Kwon is emblematic of broader regulatory scrutiny within the cryptocurrency sector, particularly as federal authorities have intensified their focus on financial misconduct following the price downturn in 2022. Kwon’s situation highlights the risks inherent in digital currency investments and the critical need for transparency and regulatory compliance within the rapidly evolving crypto landscape.
As Kwon prepares to plead guilty to conspiracy to defraud and wire fraud, the outcome of this case may have far-reaching implications for the future of cryptocurrency regulation and investor protection. The developments surrounding this case continue to unfold, and stakeholders across the industry are watching closely to gauge the potential impact on the broader market.
For further details, visit the original source: New York Post.
