Terraform Labs Co-Founder Do Kwon might be ready to plead guilty in a U.S. criminal case linked to the $40 billion collapse of the TerraUSD (UST) stablecoin in 2022.
According to a court filing, U.S. District Judge Paul A. Engelmayer in New York has scheduled a hearing for August 12, 2025, to confirm whether Kwon will change his plea. The judge also stated that Kwon should be prepared to explain exactly what he did if he pleads guilty.
Kwon had previously pleaded not guilty in January to charges including conspiracy to defraud, securities and commodities fraud, wire fraud, market manipulation, and money laundering.
The Collapse of UST Stablecoin
These charges are tied to the failure of Terraform’s algorithmic stablecoin UST, which collapsed in May 2022 after its link to the LUNA token broke, wiping out billions from the crypto market, and triggering the downfall of other firms, including FTX.
Sources told Bloomberg that prosecutors and Kwon’s lawyers are discussing a possible plea deal, although details haven’t been finalized. Kwon has been in U.S. custody since being extradited from Montenegro, where he was arrested in March 2023 for trying to travel with fake documents.
Both the U.S. and South Korea are seeking criminal charges against Kwon, so even if he pleads guilty in the U.S., it might not absolve him of guilt in other countries. Terraform Labs, which went bankrupt in January, has claimed innocence.
Reports of the possible guilty plea of Kwon have affected crypto prices, with prices of LUNA and LUNC falling. Terra’s LUNA token is trading at $0.1588, down 4.59% in the past 24 hours, with a market cap of $112.76 million. Additionally, Terra Classic (LUNC) is priced at $0.00006067, down 3.77%, holding a market cap of $334.15 million.
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