Current Developments
U.S. criminal case for $40 billion crypto fraud: Do Kwon is facing a serious nine-count federal indictment—including charges of securities fraud, wire fraud, commodities fraud, and conspiracy to commit money laundering—related to the collapse of TerraUSD and LUNA in 2022, which erased around $40 billion in investor value.
Plea shift imminent: Although Kwon initially pleaded not guilty in January 2025, a U.S. District Judge (Paul Engelmayer) has now scheduled a hearing for Tuesday, August 13, 2025 (though some reports mention August 12), where Kwon is expected to change his plea to guilty.
This potential plea change marks a major shift in the case and may align with plea agreement negotiations.
Civil liability already established: Earlier, a U.S. jury found Terraform Labs and Kwon civilly liable for fraud, following claims that they misled investors about TerraUSD’s stability and the use of their technology in a popular payment app.
Bankruptcy complications and further investigation: The court-appointed administrator overseeing Terraform’s Chapter 11 liquidation accuses Dentons (Terraform’s former law firm) of obstructing the investigation—alleging document tampering, conflict of interest, and misuse of encrypted communications to destroy evidence. A hearing is scheduled later this month to resolve these issues.
Summary Table
Issue Status / Development
Criminal indictment (U.S.) Nine felony charges filed; hearing scheduled for plea change
Plea status Originally not guilty; may shift to guilty plea
Civil liability Found liable by jury in New York civil trial
Bankruptcy and evidence issues Administrator accuses law firm of obstructing probe; upcoming court hearing
Why It Matters
A guilty plea may signal Kwon’s cooperation with prosecutors and could influence sentencing—while wrapping up the most high-profile U.S. crypto fraud case to date.
Legal accountability for the Terra collapse may serve as a precedent, reinforcing that crypto founders can be prosecuted under existing fraud, securities, and commodities laws.
The ongoing bankruptcy dispute highlights how deeply legal wounds from the collapse run—not just criminally, but in corporate governance and transparency.
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