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Do Kwon Considers Change of Plea in US Fraud Case Tied to TerraUSD Collapse
Terraform Labs co-founder Do Kwon is contemplating altering his plea in a prominent fraud case in the United States related to the catastrophic collapse of the TerraUSD stablecoin in 2022. A federal judge, Paul Engelmayer of the Southern District of New York (SDNY), has scheduled a hearing on Tuesday where Kwon may formally change his plea.
Kwon, who initially pleaded not guilty to nine felony charges back in January, has been directed to prepare a thorough account detailing the elements of any offences he may concede to. The charges he faces include securities fraud, market manipulation, money laundering, and wire fraud, all linked to his significant role at Terraform Labs and the staggering AUD 61.38 billion (approximately USD 40 billion) downfall of the Terra ecosystem.
Legal Proceedings and Arrest Background
Following his arrest in Montenegro in March 2023 for attempting to use a falsified passport, Kwon’s legal struggles with extradition to both the US and South Korea have been extensive. Eventually, he was transferred to US custody in December 2024, where he has remained without bail.
Prior to this upcoming hearing, a trial was projected to commence in January 2026. Prosecutors are in the process of reviewing an extensive six terabytes of data as part of their discovery efforts. The judge’s order indicates that Kwon’s legal team should have discussed any potential plea agreement with him beforehand. Prosecutors in the SDNY, under the guidance of interim US Attorney Jay Clayton, have reportedly engaged in constructive dialogue with Kwon’s defence lawyers in recent months.
In a parallel development, Terraform Labs settled a civil fraud lawsuit with the US Securities and Exchange Commission (SEC) in 2024, consenting to pay around AUD 6.91 billion (approximately USD 4.5 billion) in disgorgement fines, penalties, and prejudgment interest. The collapse of the Terra network proved to be a pivotal moment in the cryptocurrency sector, severely undermining investor confidence and erasing substantial value from the market.
This plea hearing could represent a critical turning point not only in Kwon’s legal battles but also in related cases in South Korea, where he faces further charges.
Conclusion
As developments in Kwon’s case unfold, stakeholders in the cryptocurrency market and legal communities will be closely monitoring the implications of his potential plea change. The outcomes in this high-profile case could have lasting effects on regulatory practices in the crypto space, investor sentiment, and the future of similar blockchain projects.
