- Terra co-founder Do Kwon pleaded guilty to two counts of fraud.
- He was originally facing nine counts of fraud and as much as 130 years in prison.
- He has agreed to forfeit more than $19 million.
Terra co-founder Do Kwon pleaded guilty to two counts of fraud on Monday, more than three years after the dramatic collapse of the blockchain and its stablecoin, UST.
He has also agreed to forfeit more than $19 million, according to court documents.
Kwon, 33, had initially pleaded not guilty to nine counts of fraud that carried a maximum penalty of 130 years in prison, and his criminal trial was set to begin in January 2026.
The $40 billion implosion of the Terra blockchain set off a series of billion-dollar failures in 2022 that culminated in the bankruptcy of FTX.
Those failures cratered crypto prices and exposed several industry businesses built on fraud — including Terra, according to US prosecutors.
Kwon was extradited to the US on New Year’s Eve, ending an 18-month tug-of-war between South Korea — his home country — and the US.
Prosecutors in both countries sought Kwon’s extradition from Montenegro, where he was arrested in March 2023 after a six-month manhunt while attempting to board a flight using a fake passport, authorities allege.
Kwon had orchestrated “a massive, highly sophisticated fraud,” prosecutor Jared Lenow told Judge Paul Engelmayer in January.
“He wasn’t just promoting a coin,” Lenow said, but “a utopian system” that included a stablecoin, savings bank, and payment system purportedly controlled by their users.
But the “core systems” did not function as advertised, according to the prosecutor.
“Behind the scenes it didn’t work,” and Kwon had to intervene in an ostensibly self-regulating ecosystem to “create the illusion” it was functional, Lenow said.
Kwon’s defense attorney, former federal prosecutor Michael Ferrara, said there was a real product there, and disputed the notion that Kwon had set out to defraud investors.
On Monday, however, Kwon said he had defrauded investors by lying about the means he used to maintain UST’s peg to the US dollar, according to reporting from Inner City Press.
Kwon will be sentenced on December 11, and he faces a maximum sentence of 25 years, according to Inner City Press.
Aleks Gilbert is a New York-based DeFi correspondent for DL News. You can reach him at aleks@dlnews.com.
