Do Kwon to Enter Guilty Plea in U.S. Fraud Case Linked to Terra Collapse

Do Kwon, co-founder of Singapore-based Terraform Labs, is expected to change his plea to guilty in a U.S. criminal case tied to the 2022 collapse of the TerraUSD and Luna cryptocurrencies. Court records filed on Monday show that U.S. District Judge Paul Engelmayer scheduled a plea hearing for Tuesday at 10:30 a.m. EDT in Manhattan federal court, noting that he had been informed of Kwon's intention to alter his plea.

The charges stem from the sudden loss of approximately $40 billion in market value when TerraUSD, a so-called algorithmic stablecoin, and its companion token Luna, failed. U.S. prosecutors allege that Kwon misled investors about the stability and safety of the cryptocurrencies, which were marketed as pegged to the U.S. dollar through automated supply-and-demand mechanisms.

Kwon had initially pleaded not guilty to a nine-count indictment, which includes securities fraud, wire fraud, commodities fraud, and money laundering conspiracy. The anticipated change in plea marks a significant shift in the high-profile case, which has drawn attention from regulators and investors worldwide.

Neither Kwon's legal team nor the Manhattan U.S. Attorney's office has issued a statement regarding the latest development. The court proceeding on Tuesday is expected to clarify the scope of the plea and its potential implications for sentencing.