Crypto mogul Do Kwon guilty of fraud over $40B meltdown
What's the story
Do Kwon, the former CEO of Terraform Labs and a key figure in the 2022 cryptocurrency crash, has pleaded guilty to two counts of fraud. The collapse of his company's cryptocurrencies—TerraUSD and Luna—resulted in a massive loss for investors worldwide, amounting to over $40 billion. The US government has accused Kwon of orchestrating a multi-billion dollar crypto asset securities fraud.
Plea agreement
Prosecutors agree not to seek longer sentence
As part of the plea deal, prosecutors have agreed not to seek a sentence longer than 12 years. Kwon is scheduled to be sentenced on December 11. His guilty plea has been seen as a major step toward accountability in the digital asset sector. Todd Snyder, who was appointed by US authorities and Terraform Labs to oversee the company's liquidation, said those responsible for Terraform Labs' collapse will be held accountable and assets recovered in the best interests of claimants.
Legal battle
Kwon's legal battle
Kwon fled South Korea after an arrest warrant was issued in 2023, only to be arrested in Montenegro and extradited to the US. Prosecutors accused him of misrepresenting features that were supposed to keep TerraUSD at $1 without outside intervention. They alleged he secretly arranged for a trading firm to buy millions of dollars worth of the token to restore its value, while telling investors that a computer algorithm called Terra Protocol was responsible.
Acceptance
Kwon admits making false statements
Kwon admitted in court that he made false and misleading statements about why TerraUSD regained its peg. He had initially pleaded not guilty to nine counts stemming from the crash, including securities and wire fraud. If convicted on the original indictment, he could have faced up to 135 years in prison. As part of his plea deal, Kwon agreed not to contest the allegations in the indictment and forfeit up to $19.3 million plus interest as well as several properties.
Sentencing
Kwon still faces charges in South Korea
While prosecutors have agreed to limit their requested sentence to 12 years, Judge Paul Engelmayer has said he can impose a longer sentence. This could be up to 25 years in prison. Kwon still faces charges in South Korea, his attorney said.