Do Kwon, co-founder of Terraform Labs and a key figure in a high-profile criminal fraud case involving $40 billion, may change his stance in court in the US and agree to plead guilty. The US District Court in New York has scheduled a hearing regarding the change of charges for August 12, 2025. Judge Paul Engelmayer requires Kwon to explain the specifics of the alleged legal violations.
This is reported by Finway
Prolonged Extradition Battle and Charges
The 33-year-old Do Kwon had previously denied any wrongdoing in the fraud case. After the collapse of Terraform Labs, he evaded authorities for an extended period until he was arrested in March 2023 with fake passports at Podgorica Airport in Montenegro while attempting to fly to Dubai. Following this, Kwon contested his extradition from Montenegro for nearly two years, trying to avoid being sent to the US or South Korea, where investigations are also ongoing against him.
The charges relate to deceiving investors about the stability of the UST stablecoin and false claims regarding the use of blockchain solutions from Terraform by the payment application Chai. The collapse of TerraUSD in the spring of 2022 triggered a chain reaction in the cryptocurrency market, contributing to the bankruptcy of FTX and several other companies.
Settlement with the SEC and the Company’s Future
In 2024, the US Securities and Exchange Commission (SEC) won a civil lawsuit against Do Kwon and Terraform Labs. Jurors found that the company and its leader misled investors. As a result, Kwon and Terraform agreed to pay $4.47 billion to settle the dispute.
“The final decision on pleading guilty will depend on the businessman’s position at the hearing in the Southern District Court of New York. If he agrees to a deal, it could expedite the conclusion of the criminal proceedings.”
After the court proceedings, the company announced its cessation of operations and directed remaining assets towards settling debts with creditors. In addition to the charges in the US, Kwon is also accused of fraud and conspiracy in South Korea, where investigations are ongoing in parallel.
It is estimated that the number of individuals affected by the collapse of Terraform Labs may exceed one million.