Co-founder of TerraForm Labs Do Kwon May Plead Guilty After Years of Facing Fraud and Money Laundering Allegations in the US.
The latest information from the US federal court shows that Do Kwon, co-founder and former CEO of TerraForm Labs, may change his plea and plead guilty after years of denying allegations related to the shocking collapse of the Terra – Luna cryptocurrency ecosystem.
According to the trial scheduling order issued by Judge Paul Engelmayer of the Southern District Court of New York on Monday, the court was informed that the defendant "may change his plea". The judge also requested Kwon to "prepare a full statement describing the elements of the charges" if he decides to plead guilty. The hearing to discuss this matter is expected to take place on Tuesday morning.
Previously, in January this year, Do Kwon still maintained his innocence. However, legal pressure and the risk of a heavy sentence have raised questions about whether he is seeking a plea deal to reduce his sentence.
Do Kwon was criminally charged by US prosecutors in March 2023 with multiple offenses: conspiracy to commit fraud, commodity fraud, securities fraud, wire fraud, market manipulation, money laundering, and conspiracy to launder money. All allegations are directly related to his role in operating the Algorithmic Stablecoin TerraUSD (UST) and Luna token, which collapsed in 2022, wiping out tens of billions of dollars in value from the global cryptocurrency market.
Unlike traditional stablecoins backed by real assets, UST relied on an algorithm adjusting supply and demand in combination with Luna token to maintain its value. When this model became unbalanced in May 2022, UST's price plummeted, causing Luna to collapse, triggering a sell-off and cascading effects on numerous investment funds, exchanges, and blockchain projects.
Do Kwon's case is a prime example of the potential risks in the cryptocurrency market, especially complex financial models lacking robust collateral mechanisms.
Some sources from the legal community suggest that if he pleads guilty, Do Kwon may reach a plea agreement to reduce his sentence in exchange for cooperating with investigators to clarify the responsibilities of other parties involved in the Terra – Luna collapse. This is not just an individual legal matter for Kwon, but also a significant lesson for the entire cryptocurrency industry regarding risk management and information transparency.
