Labs Do Kwon Will Plead Guilty on August 12 in $40 Billion Fraud Case

Do Kwon, co-founder of Terraform Labs, will plead guilty at 10:30 AM on August 12 Eastern Time in federal court.

According to Inner City Press, Judge Paul Engelmayer filed an indictment on August 11. This plea represents a shift from Kwon's previous defense strategy in the high-profile cryptocurrency fraud case.

This change comes just months before the original trial date of the case, which is January 26, 2026. Judge Engelmayer had previously encouraged discussions about testimony between the prosecutor and defense attorney as both sides looked forward to the trial.

Federal Charges

Kwon faces federal charges related to operating a cryptocurrency fraud scheme that prosecutors allege caused over $40 billion in damages when the LUNA and TerraUSD tokens collapsed in May 2022.

The collapse of the Terra ecosystem marked one of the biggest failures in cryptocurrency history, causing widespread fallout across the cryptocurrency markets.

Federal prosecutors have described the Terraform ecosystem as essentially a fraud, with U.S. Assistant Attorney Jared Lenow characterizing the company's operation as a 'Potemkin village.'

Prosecutors accused Terraform's products of being unstable and needing constant adjustments to maintain market value and stability.

Arrest and Extradition to the U.S.

The plea comes after a long period during which Kwon sought to evade prosecution following the collapse of the Terra project. Kwon had been on the run for nearly a year before being arrested by Montenegrin authorities in March 2023 while attempting to travel on false passport documents.

After being arrested, Kwon fought for extradition in Montenegro before ultimately being transferred to U.S. custody.

His extradition to the United States has paved the way for federal prosecutors to pursue fraud charges that will be resolved through the upcoming plea.

This case is one of the most significant cryptocurrency fraud prosecutions undertaken by federal authorities, with alleged damages amounting to $40 billion, among the largest financial frauds in recent years.