Key highlights:
- Do Kwon pleads guilty to two wire fraud charges, waives trial in New York federal court.
- Plea agreement includes $19 million financial penalties; sentencing set for December 11.
- The case follows the Terra collapse, causing $40B losses, marked by complex extradition and lawsuits.
Do Kwon, co-founder of Terraform Labs, has changed his position in court and admitted guilt to two of the nine charges brought by U.S. authorities, including wire fraud and conspiracy to commit wire fraud.
On August 12, Kwon waived his right to a trial on these two counts in federal court in the Southern District of New York. The plea agreement reportedly includes financial penalties totaling $19 million.
Do Kwon waives his right to go to trial at the Terraform Labs trial. Source: X
What’s next for the Terraform Labs co-founder
The two felony charges could carry a maximum prison sentence of 25 years if served consecutively. However, the plea deal stipulates that prosecutors will not seek more than 12 years in prison. Sentencing is scheduled for December 11, 2025.
Judge Engelmayer remarked, “It will be up to me to decide what a just sentence for you would be” during the court hearing, according to Inner City Press.
Do Kwon is facing up to 12 years in prison. Source: X
Legal background and extradition
Kwon was indicted in March 2023 on multiple charges, including securities fraud, market manipulation, money laundering, and wire fraud—primarily related to his activities at Terraform Labs.
He first appeared in a New York court in January 2025 after extradition from Montenegro. Initially, he pleaded not guilty to all charges and was detained without bail.
Image Source: Reuters
The Terra ecosystem’s collapse in 2022 resulted in estimated losses of around $40 billion. The ecosystem included the algorithmic stablecoin TerraUSD (UST) and the LUNA token, both losing their peg to the US dollar in May 2022. This event triggered a widespread sell-off across the cryptocurrency market.
Why Kwon changed his position
The reasons behind Kwon’s reversal after seven months of litigation remain unclear. Court documents indicate ongoing discussions between U.S. prosecutors and Kwon’s legal team over “preliminary motions and related matters,” though the trial was initially slated for January 2026.
Cryptocurrency industry figures charged in the Southern District of New York have faced harsh sentences. In 2024, former FTX CEO Sam Bankman-Fried was sentenced to 25 years in prison, and Tornado Cash co-founder Roman Storm was found guilty of operating an unlicensed money transfer business and awaits sentencing.
Kwon’s guilty plea to two charges may be a pivotal moment in one of the industry’s most high-profile legal cases, with the final sentencing expected on December 11, 2025.
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Source:: Do Kwon Pleads Guilty to Two Charges in Terra Collapse Case: Faces Up to 12 Years in Prison