Do Kwon Faces 130-Year Prison Sentence After Guilty Plea in $40B Crypto Collapse

Do Kwon, the South Korean entrepreneur behind one of the largest losses in cryptocurrency history, has pleaded guilty in a U.S. court to two counts of conspiracy to defraud and wire fraud. The charges relate to the 2022 collapse of the TerraUSD and Luna cryptocurrencies, which wiped an estimated $40 billion from the market.

The 33-year-old co-founded Singapore-based Terraform Labs, the company behind the two digital assets. He entered the guilty plea before U.S. District Judge Paul Engelmayer in New York, admitting to misleading investors during the period leading up to the collapse.

Kwon had originally pleaded not guilty in January to a nine-count indictment that included securities fraud, commodities fraud, and money laundering conspiracy. Those charges carried a combined maximum penalty of up to 130 years in prison. Under the plea agreement with the Manhattan U.S. Attorneys Office, he admitted to two counts, with prosecutors agreeing to recommend a sentence of no more than 12 years if he fully accepts responsibility. The statutory maximum for the two counts remains 25 years, and sentencing is scheduled for 11 December.

Prosecutors alleged that Kwon misrepresented the stability of TerraUSD, a so-called stablecoin intended to maintain a fixed value of $1. When the token lost its peg in May 2021, he told investors that an algorithm known as the Terra Protocol had restored its value. Investigators later found that a high-frequency trading firm had been instructed to purchase large quantities of TerraUSD to artificially support its price.

Authorities stated that these false assurances prompted both retail and institutional investors to buy Terraform products, pushing the value of Luna (a separate but closely linked token) to a market capitalisation of $50 billion by early 2022. The collapse of TerraUSD quickly eroded Lunas value, triggering massive losses across the cryptocurrency sector.

In 2024, Kwon and Terraform Labs agreed to a $4.55 billion settlement with the U.S. Securities and Exchange Commission, which included an $80 million civil penalty and a permanent ban on Kwon participating in cryptocurrency transactions.

Kwon has been in custody since his extradition from Montenegro in late 2024. He also faces charges in South Korea. Under the plea agreement, U.S. prosecutors will not oppose a request for him to be transferred abroad after serving half of his U.S. sentence.

In court, Kwon acknowledged making false and misleading statements by failing to disclose the trading firm‘s involvement in restoring TerraUSD’s peg. He apologised for his actions.