Terraform Labs Founder Do Kwon Pleads Guilty To Fraud In $60B Terra/Luna Collapse

Terraform Labs founder Do Kwon has pleaded guilty to conspiracy to commit fraud and wire fraud, nearly three years after the $60 billion implosion of the Terra/Luna LUNC/USD stablecoin ecosystem.

The 33-year-old South Korean national appeared in Manhattan federal court Tuesday wearing a yellow prison jumpsuit and shackles, admitting that he knowingly misled purchasers of the TerraUSD stablecoin, Coindesk reported on Tuesday.

Judge Paul Engelmayer confirmed that Kwon understood the charges, which stem from an earlier indictment that also included securities and commodities fraud counts.

Kwon originally faced up to 135 years in prison if convicted on all charges, but a plea agreement reduced his maximum sentence to 25 years, 20 for wire fraud and five for fraud conspiracy.

The agreement allows the judge to decide whether the sentences run concurrently or consecutively, and Engelmayer noted he is not bound by the Department of Justice's (DOJ) recommendation.

Under the deal, Kwon will forfeit nearly $19.3 million plus interest, surrender a substantial portfolio of assets, and pay restitution.

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In return, the DOJ will recommend a sentence not exceeding 12 years and support a request for international prisoner transfer once he serves half his sentence.

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During the hearing, Kwon admitted to working with others between 2018 and 2022 to mislead investors in the U.S., South Korea, and beyond, including making false statements about how UST regained its dollar peg in 2021 with the help of a trading firm.

He apologized for his actions, acknowledging the damage caused.

Kwon, who once publicly mocked skeptics of UST's stability on social media, is scheduled for sentencing on December 11 in Manhattan.

He has been held in the U.S. since early 2025 following extradition from Montenegro.

In addition to the criminal case, he and Terraform Labs were found liable for civil fraud in a separate lawsuit brought by the U.S. Securities and Exchange Commission earlier this year.

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