Key Takeaways
Terraform Labs co-founder Do Kwon? Yeah, he’s throwing in the towel and pleading guilty – wire fraud, conspiracy, the whole shebang. He gets a nifty 12-year sentence suggestion, plus over $19 million in “Sorry, my bad!” money. No trial, no drama, just the classic crypto rug pull exit. 🙄
So Do Kwon – guy behind Terraform Labs, not a Bond villain (but close) – caved to U.S. prosecutors. He’ll be wearing a jumpsuit soon, after admitting two felonies: wire fraud and conspiracy to defraud. Y’know, just casual weekend stuff in crypto land.
The paperwork dropped August 12 in NYC. It’s a real twist from his “No way, not guilty!” stance. Suddenly he’s all “Alright, fine, you got me.” Makes you wonder if he got hit by basic decency or just saw the years adding up faster than crypto losses.
For those not following along: Prosecutors say Kwon totally snowed his investors about TerraUSD, this stablecoin that was supposed to hug the $1 peg tighter than a grandma at Thanksgiving.
Then, May 2022, it’s a crypto horror movie. TerraUSD faceplants, LUNC follows, and poof – $40 billion vaporized. That’s billion, with a “B”. Imagine, you wake up, check your portfolio and – whoops! – it’s gone. Like socks after laundry day. 🧦
The whole fiasco sets off chain reactions. It’s bankruptcies popping off like popcorn, regulators waking up from their naps, and everyone suddenly pretending they totally understood algorithmic stablecoins.
A courtroom turning point
August 12 again, Judge Paul Engelmayer takes center stage. You know the drill – paperwork, agreements, lots of boring questions. “Did you sign? Do you actually get what you’re admitting?” Kwon nods along, probably thinking about how much better ramen tastes outside prison. 🍜
So, with Manhattan U.S. Attorney’s Office calling the shots, Kwon ‘fesses up to two felonies. Manhattan U.S. Attorney Jay Clayton, never missing a hype moment, deadpans:
“Do Kwon used the technological promise and investment euphoria around cryptocurrency to commit one of the largest frauds in history.”
From 25 years to 12?
Sentencing? Mark your calendar – December 11. Kwon could still score a long vacation in Club Fed, but prosecutors dangle a 12-year deal if he behaves. It’s like a bad Groupon: “Come clean, get half off your time!”
Kwon did the whole “I’m so sorry, your honor,” routine. Classic:
“I made false and misleading statements about why it regained its peg by failing to disclose a trading firm’s role in restoring that peg. What I did was wrong.”
Yep, that’s Wall Street poetry right there.
A history of legal battles
If you think this is the end, oh no. Kwon’s court tour rolls on!
In 2024, he cozied up with the SEC, tossed over $80 million and got a lifetime ban from crypto – like being kicked out of Las Vegas for counting cards. Also part of a $4.55 billion settlement, because why do just one penalty?
According to Bloomberg analyst James Seyffart (who’s apparently not shocked anymore), Kwon tapping out means Luna/Terra drama won’t clog up courtrooms:
“Looks like no trial for Luna / Terra and Do Kwon.”
So, lesson learned? Don’t mess with algorithmic stablecoins, and if you do – do a better job hiding the bodies (I mean, losses). 🤷♂️
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2025-08-13 12:28