Disgraced Terra Labs co-founder Do Kwon may reportedly plead guilty in US courts for the multi-billion-dollar collapse of the algorithmic stablecoin TerraUSD (UST).
According to a new report by Bloomberg, Kwon could plead guilty to fraud for his role in the $40 billion collapse of UST in 2022 during his plea hearing this week.
In an order, Judge Paul Engelmayer told Kwon to be prepared to explain how he violated the law if he does plead guilty.
Kwon, 33, was initially arrested in March of 2023 in Montenegro after being caught attempting to board a flight to the United Arab Emirates with a forged passport.
After a two-year battle to see whether he’d be charged in the US or his native South Korea first, in which the highest court in the Balkan nation ruled he’d be extradited to the US, Kwon eventually entered a not guilty plea in January.
In a 2024 civil fraud suit filed by the U.S. Securities and Exchange Commission (SEC), a New York jury found that Kwon and Terraform Labs were liable for falsely claiming that a popular Korean payments platform was using Terraform’s blockchain to make transactions.
Additionally, the jury determined that investors were misled about the stability of UST, which was designed to mint additional Terra (LUNA) – the ecosystem’s native token at the time – as needed to maintain its peg to the US dollar.
However, the mechanism went haywire and heavily inflated both assets, causing their prices to plunge. To resolve the SEC’s case, Kwon and Terraform agreed to pay a staggering $4.47 billion fine.
In January, Judge Engelmayer set Kwon’s trial date to January 28th, 2026, anticipating that it will last 1–2 months.
In a previous press release, the Department of Justice (DOJ) said that if convicted, Kwon faces an aggregate of 130 years behind bars.
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