Do Kwon to plead guilty to fraud charges over the $40B TerraUSD collapse.
Collapse triggered a 15% market-wide crypto value drop, per a 2023 study.
Case sets a precedent for global crypto fraud enforcement.
Do Kwon, co-founder of Terraform Labs, is expected to plead guilty to U.S. fraud charges in a Manhattan federal court.
The case stems from the catastrophic collapse of TerraUSD in May 2022, which erased $40 billion in market value and triggered a ripple effect that contributed to the downfall of FTX.
DO KWON EXPECTED TO PLEAD GUILTY IN $40B TERRAUSD COLLAPSE CASE
– Terraform Labs co-founder Do Kwon is expected to plead guilty Tuesday in Manhattan federal court to U.S. fraud charges over the 2022 TerraUSD collapse that erased $40B in value, court records show.
– According to… pic.twitter.com/EYF3JKBTEx
— BSCN (@BSCNews) August 12, 2025
Initially pleading not guilty in January after a year-long extradition battle between the U.S. and South Korea, Kwon’s change of plea marks a significant turn in one of the most high-profile crypto fraud cases to date. Arrested in Montenegro in March 2023 with fake passports, the 33-year-old now faces a nine-count indictment, including securities fraud, wire fraud, and money laundering conspiracy.
The TerraUSD debacle involved an algorithmic stablecoin tied to the Luna token, designed to maintain a $1 peg. However, in May 2022, the peg failed, causing Luna’s value to plummet from over $120 to near zero. A 2023 study from the Journal of Financial Stability linked this collapse to a 15% drop in the broader crypto market. In April, a U.S. jury found Kwon and Terraform misled investors, agreeing to a $4.47 billion civil settlement and the company’s wind-down. His guilty plea, if accepted, could resolve U.S. proceedings and influence his separate prosecution in South Korea, setting a precedent for cross-border crypto enforcement.
This case underscores the growing scrutiny of the crypto industry, with a 2024 SEC report noting a 30% rise in cross-border fraud cases since 2020. Montenegro’s 2024 decision to extradite Kwon to the U.S. over South Korea highlights international tensions in pursuing justice. A guilty plea would mark a landmark moment, challenging the narrative of self-regulating crypto markets and reinforcing the need for robust regulatory frameworks.
Disclaimer: This article is for informational purposes only and does not constitute financial advice. CoinCryptoNewz is not responsible for any losses incurred. Readers should do their own research before making financial decisions.
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