Terraform Labs’ Do Kwon Set to Plead Guilty in Major US Crypto Fraud Case

Terraform Labs co-founder Do Kwon has finally pleaded guilty on two felony counts of wire fraud and conspirary to defraud.

According to reports on Tuesday from the U.S district Court in the Southern District of New York, Kwon has given up his right for a trial on two of the nine charges brought by the U.S government.

As part of a reported plea agreement with prosecutors, he faces $19 million in financial penalties.

The two charges carry a combined maximum sentence of up to 25 years if served consecutively. However, under the agreement, prosecutors will reportedly not recommend more than 12 years. Kwon’s sentencing is scheduled for December 11.

“It will be up to me to decide what a just sentence for you would be.”

Kwon was indicted in March 2023 on multiple counts, including securities fraud, market manipulation, money laundering, and wire fraud, over his role in the collapse of Terra.

He served four months in prison before both U.S. and South Korean officials sought his extradition — a process delayed by legal disputes in Montenegro’s lower courts.

The 33-year-old had initially pleaded not guilty to all the nine felony charges in January after a long dispute over whether he would first be prosecuted in South Korea of U.S first.

From Global Manhunt to Courtroom Reckoning

Both countries have charged Kwon in connection to TerraUSD’s spectacular loss of its dollar peg and the resulting crypto market turmoil of May 2022.

The stablecoin’s algorithmic structure, designed to maintain price stability through a mint-and-burn relationship with its sister token Luna, ultimately failed—contributing to wider industry collapses and undermining faith in digital assets.

His whereabouts were unknown to the public for months after the crash, until authorities in Montenegro arrested Kwon and Terraform’s former CFO Han Chang-joon in Montenegro in March 2023 while they were attempting to board a private jet to Dubai using fake passports.

Their arrest capped an intense international manhunt and led to a prolonged extradition battle between Washington and Seoul.

Kwon’s legal troubles intensified after a U.S. civil trial in April 2024 found both he and Terraform guilty of misleading investors about the reliability of TerraUSD. The jury also concluded that they falsely claimed that Chai, a popular Korean payment app, was using Terraform's blockchain for transactions.

As part of a landmark settlement, Kwon and Terraform agreed to pay $4.47 billion, commit to permanently unwinding operations, and direct any remaining assets toward creditor repayment.

Notably, Kwon personally held a commanding 92% ownership stake in the company—highlighting his deep involvement in Terraform’s operations and ultimate collapse.

Could Kwon Be Released Back To Korea Where He Will Be A Free Man?

The reason behind Kwon's change of mind to plea guilty after seven months remained unclear. Court filings indicate that U.S. prosecutors had been engaging in discussions with Kwon’s legal team over “pretrial motions and related issues,” and the case had still been expected to proceed to trial in January 2026.

Here at Coinlive, we speculate that Do Kwon could be trying to leverage on this plea deal to not just shorten his sentence from the original 25 years to 12 years, but also to get himself deported back to Korea early, where he could ultimately be even set free.

This was the exact stun his partner-only known by his initials J.C.H-pulled off just months ago, where he was extradited from Montenegro to South Korea in early February.

Past cases show that crypto-related defendants in the Southern District of New York rarely receive lenient outcomes.

In 2024, former FTX CEO Sam Bankman-Fried was sentenced to 25 years in prison, while Tornado Cash co-founder Roman Storm was recently convicted of operating an unlicensed money-transmitting business and awaits sentencing, with the possibility of facing a retrial on two additional charges.