TLDR
- Do Kwon faces nine charges including fraud and money laundering over TerraUSD collapse.
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A guilty plea could streamline the case and impact ongoing investigations in South Korea.
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TerraUSD’s collapse wiped out $40 billion, contributing to the downfall of major crypto players.
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Kwon’s extradition and trial span multiple countries and legal jurisdictions.
Terraform Labs co-founder Do Kwon is set to appear in U.S. federal court on Tuesday for a hearing regarding his change of plea. Kwon, who was originally charged with a range of offenses, including securities fraud, wire fraud, and market manipulation, may plead guilty in connection with the 2022 collapse of the TerraUSD (UST) stablecoin.
Judge Paul Engelmayer of the U.S. District Court for the Southern District of New York issued a scheduling order on Monday, advising that Kwon might admit to all charges. Kwon’s defense team has been instructed to prepare a detailed statement for each charge he plans to plead guilty to. This hearing, scheduled for 10:30 AM on Tuesday, could mark the end of a long-running legal saga in the cryptocurrency world.
Collapse of TerraUSD and Its Aftermath
The charges against Kwon stem from the catastrophic failure of TerraUSD, an algorithmic stablecoin linked to the Luna token. The collapse of TerraUSD in May 2022 wiped out approximately $40 billion in market value, causing a ripple effect throughout the cryptocurrency industry. The failure contributed to the downfall of major crypto players, including the FTX exchange.
Do Kwon Update: The plea hearing is tomorrow August 12th.
Do Kwon was extradited to the United States from Montenegro on December 31, 2024.
He initially pleaded not guilty to nine felony counts, including securities fraud, market manipulation, money laundering, and wire fraud.… pic.twitter.com/TJTPmCAATB
— MartyParty (@martypartymusic) August 11, 2025
TerraUSD was designed to maintain its dollar peg through a mint-and-burn mechanism involving Luna. However, the failure of this algorithm caused the stablecoin to lose its value, leading to mass sell-offs and investor losses.
Kwon and Terraform Labs have been accused of misleading investors about the stability of TerraUSD, fueling the dramatic crash that followed.
Do Kwon Legal Journey and Extradition
Kwon was arrested in Montenegro in March 2023 after months of evading authorities. His extradition to the U.S. was contentious, with both the United States and South Korea seeking his prosecution. Kwon’s legal team initially pleaded not guilty to the charges in January, but the upcoming hearing suggests a change in strategy.
Kwon’s case has drawn significant attention due to the scale of the collapse and its impact on the broader crypto market.
U.S. prosecutors have charged him with nine counts, including conspiracy to commit fraud and money laundering. The outcome of this case could serve as a landmark in how cryptocurrency fraud is prosecuted globally.
Do Kwon Plea and Broader Legal Implications
The possible guilty plea could expedite the U.S. case against Kwon, potentially influencing ongoing investigations in South Korea. There, Kwon faces separate charges related to financial misconduct and violations of capital market laws. If Kwon pleads guilty in the U.S., it could pave the way for similar proceedings in South Korea.
In addition to his criminal case, Kwon and Terraform Labs were also involved in a civil fraud case, which concluded with a $4.47 billion settlement in April 2024. Kwon’s personal stake in Terraform Labs was 92%, reflecting his deep involvement in the company’s operations and the eventual collapse.
