Terran founder Do Kwon seeks discussions for his liberties
In a significant development, Do Kwon, co-founder of Terraform Labs, has pleaded guilty to two counts of fraud in a U.S. federal court related to the collapse of TerraUSD (UST) and Luna cryptocurrencies.
The guilty plea marks a turning point in the case that initially involved nine felony charges connected to the approximately $40 billion TerraUSD/Luna collapse. The sentencing is scheduled for December 11, 2025, with prosecutors agreeing to recommend a sentence no longer than 12 years if Kwon fully admits responsibility; the maximum possible sentence is 25 years.
Kwon’s guilty plea came after he initially pleaded not guilty and faced an extensive trial process. The plea effectively moves toward resolving the criminal case brought by U.S. authorities, who accused him of orchestrating a scheme that misled investors by falsely claiming TerraUSD was algorithmically pegged to the U.S. dollar and manipulating the token's market price.
As part of the legal resolution, Kwon has also agreed to forfeit more than $19 million and had earlier settled with the U.S. Securities and Exchange Commission (SEC) in 2024, agreeing to pay $4.47 billion in civil penalties and shutting down Terraform Labs.
Kwon remains in U.S. custody after his extradition from Montenegro in late 2024, and he will also face a trial in South Korea. The case is closely watched as it may set important regulatory precedents for how fraud and market manipulation cases in the crypto industry are handled by authorities worldwide.
The collapse of TerraUSD had wide-ranging negative effects on the broader crypto market, including significant investor losses and heightened scrutiny of stablecoins and crypto project transparency. The guilty plea of Do Kwon is at least a step towards accountability for Terra collapse victims, and it signifies a tightening of crypto industry regulation.
However, the damage to Terra investors is immense, and it remains to be seen how this development will impact the future of the crypto market. The case serves as a reminder of the importance of transparency and honesty in the crypto industry, and it underscores the need for robust regulatory frameworks to protect investors.
References:
- CoinDesk
- Bloomberg
- Reuters
- The Wall Street Journal
- The New York Times
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