Do Kwon, the South Korean cryptocurrency businessman behind two digital currencies that lost about $40 billion in 2022, intends to plead guilty on Tuesday to two counts of conspiracy to commit wire fraud and wire fraud, a judge said at a US court hearing.
U.S. Federal Judge Paul Engelmayer is expected to ask Kwon, who co-founded Singapore-based Terraform Labs and developed the TerraUSD and Luna currencies, a series of questions before formally asking him to plead guilty.
Kwon, 33, pleaded not guilty in January to a nine-count indictment charging him with securities fraud, wire fraud, commodities fraud and conspiracy to launder money.
He was accused of misleading investors in 2021 about TerraUSD, a stablecoin designed to maintain a value of $1.
Kwon allegedly told investors that a computer algorithm called the "Terra Protocol" restored the currency's value when it fell below its price in May 2021, while in reality he arranged for a high-frequency trading firm to secretly buy millions of dollars of the token to artificially inflate its price.
Prosecutors in the U.S. Attorney's Office in Manhattan said false statements and other claims prompted individual and institutional investors to purchase Terraform products and pushed the value of Luna, a more conventional token developed by Kwon that fluctuates in value but is closely linked to TerraUSD, to $50 billion by the spring of 2022.
Kwon agreed to pay an $80 million civil penalty in 2024 and be 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 his extradition from Montenegro late last year. He is one of several cryptocurrency tycoons facing federal charges after digital currency prices plummeted in 2022, leading to the collapse of several companies.
