Terraform Labs' Ex-Leader Do Kwon Admitted Guilt in Conspiring and Committing Fraud Leading to $44B Crypto Market Crash
In a significant turn of events, Do Kwon, co-founder of Terraform Labs, has pleaded guilty to two counts of wire fraud and conspiracy related to the collapse of TerraUSD (UST) and Luna (LUNA) in 2022. The guilty plea was made on August 12, 2025, at a hearing in the U.S. District Court for the Southern District of New York.
Kwon's guilty plea comes after initially pleading not guilty to nine felony charges related to the TerraUSD collapse. By pleading guilty to two of the charges, Kwon has effectively resolved these specific counts. The status of the remaining seven charges is not explicitly detailed in recent reports, but it is typical for such plea agreements to either dismiss or reduce the severity of the remaining charges in exchange for the guilty pleas on the more serious counts.
The Terra market crash, which began on May 7, 2022, affected approximately one million people, resulting in a loss of nearly $45 billion in market capitalization for Terraform Labs. Kwon's guilty plea has avoided a trial previously set for January 2026, marking a significant development in one of the most prominent crypto fraud cases.
The sentencing hearing for Kwon is scheduled for December 2025. The judge has the authority to issue any punishment within the court's sentencing guidelines, up to and including the full 25 years in prison. The prosecution has recommended a 12-year prison sentence plus $19 million in fines in exchange for the guilty plea.
Kwon admitted to knowingly agreeing to participate in a scheme to defraud purchasers of cryptocurrencies between 2018 and 2022. This guilty plea may set a precedent for future legal actions related to cryptocurrency market manipulation, drawing industry-wide attention to regulatory scrutiny.
Meanwhile, Roman Storm, a developer of Tornado Cash, has been found guilty of operating an illegal money transfer business. If Storm maintains his not guilty plea for the remaining charges related to fraud and money laundering, he is expected to face trial sometime in 2026.
It is important to note that this article aims to deliver accurate and timely information but should not be taken as financial or investment advice. Market conditions can change rapidly, so it's recommended to verify information independently and consult with a professional before making any decisions based on this content.
References:
- CoinDesk
- Inner City Press
- The Verge
- Bloomberg
- Reuters
In light of the guilty plea, discussions surrounding the intersection of finance and technology will likely include the implications of Kwon's actions on the cryptocurrency market and potential precedents for future legal actions. Additionally, the technology sector may also face scrutiny as Roman Storm, a developer, faces charges for running an illegal money transfer business.
