South Korean cryptocurrency mogul Do Kwon pleaded guilty on Tuesday to two fraud charges arising from the $40 billion collapse of a cryptocurrency ecosystem that had promised investors their money was safe. Kwon, 33, dubbed by some as “the cryptocurrency king,” entered the plea in Manhattan federal court. According to a plea agreement signed by Kwon and prosecutors, the government said it will not seek a prison term of more than 12 years as long as Kwon complies with the deal's terms, even though federal sentencing guidelines would have recommended a prison term of about 25 years. Sentencing is set for Dec. 11. Authorities said investors worldwide lost money in the Singapore crypto firm Terraform Labs’ $40 billion cryptocurrency crash. Kwon co-founded the company in 2018. The May 2022 collapse came after the company claimed that TerraUSD was a reliable “stablecoin.” TerraUSD was designed as a “stablecoin,” a currency pegged to stable assets such as the dollar to prevent drastic fluctuations in prices. However, around $40 billion in market value was erased for the holders of TerraUSD and its floating sister currency, Luna, after the stablecoin plunged far below its $1 peg. Kwon was extradited to the United States on Dec. 31 from Montenegro after his March 23, 2023, arrest while traveling on a false passport in Europe. As part of his plea to one count of conspiring to commit commodities fraud, securities fraud and wire fraud and a second count of wire fraud, Kwon also agreed to forfeit over $19 million, an amount that authorities said reflected ill-gotten proceeds. He'll also lose his interest in Terraform and its cryptocurrencies. His lawyer, Sean Hecker, said the plea meant that Kwon had accepted responsibility for making false and misleading statements to investors. In a statement, the lawyer said his client "takes responsibility for misleading the Terra community.” In a news release, U.S. Attorney Jay Clayton said Kwon “used the technological promise and investment euphoria around cryptocurrency to commit one of the largest frauds in history.” He said investors around the world suffered billions of dollars in losses.

Source: Crypto mogul Do Kwon, known as 'the cryptocurrency king,' pleads guilty to fraud charges (WINK News, Associated Press)

Frequently Asked Questions (FAQ)

Do Kwon's Plea and Charges

Q: What charges did Do Kwon plead guilty to? A: Do Kwon pleaded guilty to two fraud charges: one count of conspiring to commit commodities fraud, securities fraud, and wire fraud, and a second count of wire fraud. Q: What was the estimated loss from the Terraform Labs collapse? A: The collapse of Terraform Labs' cryptocurrency ecosystem led to an estimated loss of $40 billion for investors worldwide. Q: What was the maximum prison term Do Kwon could face under the plea agreement? A: Under the terms of the plea agreement, the government will not seek a prison term exceeding 12 years, provided Kwon complies with the agreement. Q: When is Do Kwon's sentencing scheduled? A: Do Kwon's sentencing is scheduled for December 11. Q: What is a "stablecoin"? A: A stablecoin is a type of cryptocurrency designed to maintain a stable value, often by being pegged to a stable asset such as the US dollar, to prevent drastic price fluctuations. Q: What led to the TerraUSD (UST) and Luna collapse? A: The collapse occurred when TerraUSD, which was marketed as a stablecoin, plunged significantly below its $1 peg, causing a loss of approximately $40 billion in market value for holders of both TerraUSD and its sister currency, Luna. Q: Where was Do Kwon extradited from and when? A: Do Kwon was extradited to the United States from Montenegro on December 31. Q: What did Do Kwon agree to forfeit as part of his plea? A: As part of his plea, Do Kwon agreed to forfeit over $19 million, representing ill-gotten proceeds, and will also lose his interest in Terraform Labs and its cryptocurrencies.

Crypto Market AI's Take

The conviction of Do Kwon highlights the critical importance of robust regulatory frameworks and diligent due diligence in the cryptocurrency space. The collapse of Terraform Labs serves as a stark reminder of the risks associated with highly volatile digital assets and the need for transparency and accountability from project founders and developers. At Crypto Market AI, we are committed to providing users with accurate, data-driven insights to navigate the complexities of the crypto market safely. Our AI-powered tools are designed to help identify potential risks and opportunities, empowering investors to make informed decisions. You can learn more about navigating the complexities of the crypto market and the importance of due diligence in our guides on cryptocurrency trading.

Crypto mogul Do Kwon, known as 'the cryptocurrency king,' pleads guilty to fraud charges

Frequently Asked Questions (FAQ)

Do Kwon's Plea and Charges

Crypto Market AI's Take

More to Read: