Terraform Labs co-founder Do Kwon, the architect behind the failed TerraUSD (UST) stablecoin, is expected to plead guilty to nine U.S. criminal charges, including securities fraud, commodities fraud, wire fraud, conspiracy to commit money laundering, and other counts related to the 2022 collapse of UST and its sister token LUNA.
U.S. District Judge Paul Engelmayer has scheduled a change-of-plea hearing for August 12, 2025, at 10:30 a.m. Eastern, following a prolonged extradition dispute between the United States and South Korea. Kwon, who initially pleaded not guilty in January, was extradited from Montenegro on December 31, 2024.
Collapse and Extradition Background
UST’s algorithmic one-to-one dollar peg mechanism failed in May 2022, triggering a market crash that wiped out about $40 billion in value and undermined investor confidence. Kwon remained a fugitive until his March 2023 arrest in Montenegro. He and former CFO Han Chang-joon were detained for attempting to board a private jet with falsified documents.
Implications of a Guilty Plea
A guilty plea would mark a pivotal turn in one of crypto’s most high-profile cases and potentially expedite related civil proceedings, such as the SEC’s 2024 fraud judgment requiring a $4.47 billion settlement and asset disposals. Kwon’s admission of wrongdoing could also shape ongoing South Korean charges under capital markets laws.
Legal observers note that the outcome may set precedents for prosecuting cross-border crypto fraud and reaffirm regulatory scrutiny of algorithmic stablecoins. The resolution of Kwon’s case is anticipated by industry stakeholders as a milestone in enforcing accountability within the decentralized finance sector.
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