Terraform Labs Pte. co-founder Do Kwon pleaded guilty to charges in a US fraud prosecution tied to the $40 billion collapse of the TerraUSD stablecoin in 2022.
Kwon pleaded guilty to conspiracy and wire fraud under an agreement with prosecutors at a hearing in New York on Tuesday. The 33-year-old, dressed in a yellow prison jumpsuit, also agreed to forfeit $19.3 million and some properties as part of the plea deal.
“I knowingly agreed with others to defraud, and did in fact defraud, purchasers of cryptocurrencies issued by my company, Terraform Labs,” Kwon said, reading from a statement. “What I did was wrong and I want to apologize for my conduct. I take full responsibility.”
Kwon was charged in both South Korea and the U.S. in connection with the implosion of Singapore-based Terraform’s TerraUSD, which shook the crypto world in the spring of 2022 and helped trigger the meltdown of cryptocurrency exchange FTX.
The guilty plea averts a trial set for next year before U.S. District Judge Paul Engelmayer.
He was charged in 2023 and was extradited to the U.S. in January, after spending almost two years in Montenegro, where he’d been arrested and convicted of using a phony passport while a fugitive from charges in his native South Korea.
U.S. prosecutors said the longest sentence they will seek under the plea deal is 12 years. The maximum U.S. sentences are five years for the conspiracy count and 20 years for the wire fraud charge.
Sentencing is scheduled for Dec. 11. He had faced nine charges under the indictment.
After he serves half of his sentence, the U.S. will support Kwon spending the remainder of his prison term in South Korea, if he abides by the terms of his plea deal and qualifies under transfer program.
Kwon had been a fugitive from the South Korean charges for months when he and Terraform’s former chief financial officer were caught with fake passports in March 2023 trying to board a Dubai-bound private jet at the airport in Montenegro’s capital, Podgorica.
SEC Case
Terraform and Kwon, who owned 92% of the company, were found liable for civil fraud in a 2024 suit by the U.S. Securities and Exchange Commission. A jury in New York, at the end of a two-week trial, determined that Kwon and Terraform misled investors—a dismal sign for the former crypto mogul’s chances of beating criminal charges.
The jury found that Terraform and Kwon falsely claimed that Chai, a popular Korean payment application, was using Terraform’s blockchain technology to make transactions. The jurors also found investors were misled about the stability of the stablecoin, which Kwon and Terraform claimed was algorithmically pegged to the US dollar.
Terraform and Kwon later agreed to pay $4.47 billion and to wind down the firm, in a deal to resolve the case.
The case is US v. Kwon, 23-cr-0151, US District Court, Southern District of New York (Manhattan).