Terraform's Do Kwon Pleads Guilty to Conspiracy, Wire Fraud in UST Blow-up

NEW YORK — Terraform Labs founder Do Kwon pleaded guilty to conspiracy to commit fraud and wire fraud Tuesday morning, three years after the dramatic $60 billion collapse of the Terra/Luna stablecoin ecosystem.

The 33-year old South Korean national arrived in court in handcuffs and a canary yellow prison jumpsuit, a metal chain around his waist. He admitted that he "knowingly engaged in a scheme to defraud and did in fact defraud" purchasers of the TerraUSD (UST) stablecoin.

Judge Paul Engelmayer, who is overseeing the case, walked the Terra creator through the charges to establish that Kwon was indeed guilty of the allegations laid out in an earlier indictment, which included seven other charges such as securities and commodities fraud. Under the charges in the original indictment, Kwon faced a maximum sentence of 135 years in prison if convicted on all counts. Kwon’s plea agreement with the government slashes his maximum sentence to 25 years — 20 for the wire fraud charge, and five for the fraud conspiracy charge, which the judge can either order to be served consecutively or concurrently.

Throughout the hearing, the judge noted that he was not bound by the DOJ's plea agreement, meaning he could sentence Kwon to a lengthier sentence than the DOJ suggested.

Under the terms of the plea agreement, laid out by an assistant U.S. attorney, Kwon agreed to pay a maximum forfeiture of $19,286,774.78 plus interest, forfeit what Engelmeyer described as a “substantial set” of properties and pay restitution. He also agreed not to contest the factual allegations in the indictment. In exchange, the DOJ agreed to recommend a maximum sentence of 12 years. Once he's served half of his ultimate sentence, the DOJ agreed to support any motion Kwon makes for an international prisoner transfer.

Kwon's attorney said there remain open charges against him in South Korea.

In a prepared statement, Kwon said he'd worked with others to defraud UST purchasers in South Korea, the Southern District of New York and other locations between 2018 and 2022, and that he'd used international and interstate wires to do so.

“Between 2018 and 2022 in the Southern District of New York and elsewhere, I knowingly agreed with others to engage in a scheme to defraud, and did in fact defraud, purchasers of the cryptocurrencies issued by my company, Terraform Labs,” Kwon said. "In 2021, I made false and misleading statements about why [UST] regained its peg," he added, noting that a trading firm had been involved. "What I did was wrong and I want to apologize for my conduct."

Kwon had repeatedly and publicly cheered on UST, criticizing detractors or anyone who questioned the token's stability.

"Have fun staying poor," he tweeted at one user on X in 2021.

Just over a dozen people sat in the gallery ahead of the hearing, with more than half of that group consisting of reporters. Throughout the hearing, the judge asked a number of procedural questions to establish that Kwon was competent to plead guilty, running briefly through his medical history and checking at multiple points that Kwon had read the filings he was agreeing to and discussed them with his legal team.

Kwon will be sentenced on Dec. 11 at 11:00 a.m. in Manhattan. By the time of his sentencing, he will have been in U.S. custody for almost a year.

Kwon has been in the U.S. since New Year's, following a lengthy extradition process with the government of Montenegro. He and Terraform Labs had already been found liable for civil fraud by a jury in a case brought by the U.S. Securities and Exchange Commission, following UST's collapse.

UPDATE (August 12, 2025, 16:42 UTC): Adds details from the hearing.