- Do Kwon may change plea in U.S. fraud case tied to 2022 TerraUSD and LUNA collapse.
- Charges include securities fraud, wire fraud, market manipulation, and money laundering.
- Extradited from Montenegro, Kwon has been held without bail for seven months.
Do Kwon, the co-founder of the collapsed Terraform Labs, is expected to change his plea in his high-profile fraud case in a New York federal court today, Tuesday, August 12. The update follows a filing where Judge Paul Engelmayer noted the court had been advised of Kwon’s intention to change his plea from “not guilty.”
According to the order, Judge Engelmayer has instructed Kwon to prepare a full narrative defense covering all elements of the offenses to which he now intends to plead.
The Charges Behind the Terra Collapse
Kwon was charged in March 2023 on multiple felony counts, including securities fraud, wire fraud, commodities fraud, conspiracy to defraud, market manipulation, and money laundering conspiracy. The allegations are linked to the 2022 collapse of Terraform’s algorithmic stablecoin TerraUSD (UST) and its paired governance token LUNA, which collectively erased billions of dollars in market value.
Prosecutors allege that the system, designed to maintain UST’s value through algorithmic incentives tied to LUNA, failed in May 2022, leading to widespread investor losses.
Following the collapse, Kwon was a fugitive for months before authorities in Montenegro arrested him for using fake travel documents.
How did it get to this? Kwon’s appearance in a US court was the result of a long international chase. Here’s the news report of his extradition from Montenegro.
After being transferred to U.S. custody in December 2024, Kwon pleaded not guilty to all charges in January 2025 and has been held without bail ever since.
How Is the LUNA Price Reacting?
The market’s reaction to the news of a potential plea change has been muted so far. At the time of writing, the price of LUNA was trading at $0.00008, down about 1% on the day.
While a plea deal could be seen as a positive step toward resolving the long-standing legal uncertainty, it also serves as an admission of guilt, which may be tempering any bullish enthusiasm from traders.
Broader Legal Picture
Court records show that “productive discussions” have been held in recent months between Kwon’s defense team and the U.S. Attorney’s Office. This plea change comes shortly after the same district court brought charges against Tornado Cash co-founder Roman Storm.
It’s important to note that this criminal case is separate from the civil suit brought by the SEC. In that case, Terraform Labs settled in 2024, agreeing to pay approximately $4.5 billion in penalties.
Two different cases. This criminal case is separate from the SEC’s civil suit. Here’s our past report on the massive $5.3 billion penalty in that case.
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