'Do Kwon, Cryptocurrency Figure, Admits Guilt in Fraud Case'

In a shocking turn of events in the crypto world, Do Kwon pleads guilty to fraud charges, setting the stage for significant legal repercussions and financial accountability.

 

Do Kwon, the former CEO of Terraform Labs, emerged in a New York court wearing a yellow prison jumpsuit, where he pleaded guilty to two counts of fraud tied to the collapse of his company's cryptocurrencies, TerraUSD and Luna. This failure led to a staggering loss exceeding $40 billion for investors and sparked a crisis throughout the cryptocurrency market.

Accusations against Kwon emphasize his role in orchestrating a "multi-billion dollar crypto asset securities fraud," a claim supported by U.S. prosecutors who argue that he misled investors about the stability of the TerraUSD stablecoin. As part of a plea agreement, Kwon may face a maximum sentence of 12 years, with sentencing scheduled for December 11.

Todd Snyder, appointed by U.S. authorities to oversee the liquidation of Terraform Labs, reinforced that accountability is crucial within the digital asset domain, stating that all contributors to the company’s downfall would be held responsible.

Kwon’s legal troubles stretched back to 2023, when a warrant for his arrest was issued in South Korea, prompting him to flee before being apprehended in Montenegro and extradited to the U.S. Prosecutors allege that Kwon intentionally misrepresented the mechanisms that were supposed to maintain TerraUSD's value, subsequently engaging in deceptive tactics to bolster the token's market stability.

In court, Kwon expressed remorse for his actions. "In 2021, I made false and misleading statements about why [TerraUSD] regained its peg," he acknowledged, adding, "What I did was wrong, and I want to apologize for my conduct."

Initially denying charges, Kwon was faced with nine counts, including securities fraud and money laundering, which could have led to a sentence up to 135 years. His plea deal requires him to forfeit approximately $19.3 million and other assets, while Kwon is also liable for restitution payments. Even with the plea agreement, Judge Paul Engelmayer noted that a lengthier sentence could still be warranted, potentially reaching 25 years behind bars. Kwon faces additional charges in South Korea, indicating that his legal battle is far from over.