August 13, 2025
5 min read
bbc.com
A South Korean former tech executive, Do Kwon, has pleaded guilty to two criminal counts of fraud linked to the collapse of the cryptocurrencies TerraUSD and Luna, which triggered a cryptocurrency crisis costing investors more than $40 billion (£31.8bn). Do Kwon was the CEO of Singapore-based Terraform Labs, the company behind TerraUSD and Luna. Both cryptocurrencies collapsed in 2022, causing a widespread sell-off in the crypto market. The US government accused Kwon of orchestrating a multi-billion dollar crypto asset securities fraud, holding him responsible for the failure of the two digital currencies. Prosecutors alleged that Kwon misrepresented how TerraUSD, a so-called stablecoin, was maintained at its $1 peg without outside intervention. In 2021, Kwon reportedly arranged for a trading firm to secretly purchase millions of dollars worth of TerraUSD tokens to restore its value, while publicly claiming that an algorithm called Terra Protocol was responsible for maintaining the peg. This alleged deception encouraged many investors to buy Terraform Labs’ offerings, propping up the value of Luna, a cryptocurrency closely linked to TerraUSD. The following year, both TerraUSD and Luna collapsed, wiping out billions in investor value.
In court, Kwon admitted, “In 2021, I made false and misleading statements about why [TerraUSD] regained its peg. What I did was wrong and I want to apologise for my conduct.” Originally, Kwon pleaded not guilty to nine charges including securities and wire fraud, and conspiracy to commit money laundering. He faced up to 135 years in prison if convicted on all counts. As part of a plea deal, prosecutors agreed not to seek a sentence longer than 12 years. Kwon is scheduled to be sentenced on 11 December. He also agreed not to challenge the indictment’s allegations, must forfeit up to $19.3 million plus interest, several properties, and pay restitution. Judge Paul Engelmayer, however, noted he retains the authority to impose a sentence up to 25 years. Kwon initially fled South Korea after an arrest warrant was issued in 2023. He was later arrested and jailed in Montenegro before being extradited to the US. Kwon still faces charges in South Korea, according to his attorney.
Source: BBC News