Terraform’s Do Kwon Pleads Guilty to Conspiracy, Wire Fraud in UST Blow-up

NEW YORK — Terraform Labs founder Do Kwon pleaded guilty to conspiracy to commit fraud and wire fraud Tuesday morning, three years after the dramatic collapse of the Terra/Luna stablecoin ecosystem.

Wearing a canary yellow prison jumpsuit, the 33-year-old Korean national said he “knowingly engaged in a scheme to defraud and did in fact defraud” purchasers of the TerraUSD (UST) stablecoin.

Judge Paul Engelmayer, who is overseeing the case, walked the Terra creator through the charges to establish the Kwon was indeed guilty of the allegations laid out in an earlier indictment, which had included seven other charges such as securities and commodities fraud.

Under the terms of the plea agreement, laid out by an assistant U.S. attorney, Kwon agreed to pay a maximum forfeiture of $19 million plus interest, forfeit some property and pay restitution. He also agreed not to contest the factual allegations in the indictment. In exchange, the DOJ agreed to recommend a maximum sentence of 12 years. Once he’s served half of his ultimate sentence, the DOJ agreed to support any motion Kwon makes for an international prisoner transfer.

Kwon’s attorney said there are still open charges against him in South Korea.

In a prepared statement, Kwon said he’d worked with others to defraud UST purchasers in South Korea, the Southern District of New York and other locations between 2018 and 2022, and that he’d used international and interstate wires to do so.

“In 2021, I made false and misleading statements about why [UST] regained its peg,” he said, noting that a trading firm had been involved. “What I did was wrong, and I want to apologize for my conduct.”