Terras founder, Do Kwon, admits guilt in connection to the $40 billion breakdown of the cryptocurrency platform.
Do Kwon, the man allegedly behind the failed crypto project Terra, has pleaded guilty to two charges of conspiracy to defraud and wire fraud in a U.S. court case against him. This guilty plea, entered on August 12, 2025, marks a significant turning point in the Terra crypto project and formally closes a major chapter of fraud related to the 2022 collapse of the Terra blockchain and its stablecoin, TerraUSD (UST).
Kwon admitted to making false statements about how the peg was restored and the role of another firm in the Terra project. He also confessed to working with others "to engage in a scheme to defraud." The plea agreement includes the forfeiture of $19 million and his interests in Terraform Labs and its cryptocurrencies, signifying a concrete legal and financial consequence for the project's leadership.
The collapse of Terra in 2022 left a $40 billion black hole in the crypto industry and resulted in many investors losing substantial funds. The UST stablecoin failed to maintain its stable peg to the U.S. dollar, causing the entire Terra ecosystem to collapse. The guilty plea is seen as a win for regulatory efforts to bring accountability to the crypto industry, highlighting the risks and regulatory scrutiny for algorithmic stablecoins and crypto projects promising high yields.
Kwon faces up to 25 years in prison, with sentencing scheduled for December 2025. The government will push for no more than 12 years in prison for Kwon, following the plea agreement. The specific details of the plea agreement and sentencing have not been disclosed yet.
The Terra project, founded by Kwon, was a crypto ecosystem with the flagship LUNA token and TerraUSD (UST) algorithmic stablecoin. Terra was a gateway into the world of decentralized finance (DeFi) for many investors. The collapse of Terra in 2022 led to a brutal bear market and "crypto contagion," causing the bankruptcy of digital asset firms like BlockFi and Genesis.
Crypto prices plunged in 2022 following Terra's failure, with Bitcoin nosediving to below $16,000 per coin at one point. However, most major crypto assets have gradually rebounded, with Bitcoin recently setting a new all-time high mark above $122,800. The guilty plea of Do Kwon underscores vulnerabilities in crypto markets and increases regulatory attention on crypto fraud and investor protection, reinforcing calls for tighter controls and oversight across the industry.
[1] Inner City Press, August 12, 2025 [2] New York courthouse reporting, August 12, 2025
Read also:
- A Business Model Explained: Its Purpose and Benefits for Your Venture
- Deep-rooted reinforcement of Walkerhughes' acquisitions through strategic appointment of Alison Heitzman
- Unchecked Management of HP Dams Leads to Environmental Disaster: RTI Reveals
- Impact of Trump's Enforced Russia Sanctions Could Compel Putin's Decision-Making
