Do Kwon, the South Korean cryptocurrency entrepreneur behind two digital currencies that lost about $40 billion in 2022, is planning to plead guilty on Tuesday to two counts of conspiracy to commit fraud and wire fraud, a judge said at the U.S. court trial.
U.S. District Judge Paul Engelmayer is expected to ask Kwon, the co-founder of Singapore-based Terraform Labs and developer of TerraUSD and Luna, a series of questions before formally requesting him to enter a plea.
Kwon, 33, pleaded not guilty in January to a 9-count indictment including securities fraud, wire fraud, commodity fraud, and conspiracy to commit money laundering.
He is accused of misleading investors in 2021 about TerraUSD, a stablecoin designed to maintain a value of $1.
Kwon is accused of telling investors that a computer algorithm called the 'Terra Protocol' would restore the value of the currency when it fell below its peg in May 2021, while in reality, he arranged for a secret high-frequency trading company to buy millions of dollars worth of this token to artificially inflate the price.
Prosecutors at the U.S. Attorney's Office in Manhattan said false statements and other allegations prompted retail and institutional investors to buy Terraform products and pushed the value of Luna, a more traditional token developed by Kwon, which has fluctuating value but is closely tied to TerraUSD, to $50 billion in the spring of 2022.
Kwon has agreed to pay a civil penalty of $80 million in 2024 and is banned from trading cryptocurrencies as part of a $4.55 billion settlement he and Terraform reached with the U.S. Securities and Exchange Commission.
Kwon has been in custody since being extradited from Montenegro late last year. He is one of several cryptocurrency moguls facing federal charges after the value of digital tokens plummeted in 2022, leading to the collapse of several companies.