Alleged crypto crook Do Kwon—who was behind the failed crypto project Terra—has entered a guilty plea in the United States' case against him, according to New York courthouse reporting Tuesday.
Kwon had previously pleaded not guilty to nine criminal charges in the U.S., including securities, wire, and commodities fraud, plus conspiracy to commit money laundering.
But on Monday, a court document showed that a change of plea was expected as a conference was scheduled for Tuesday. Kwon ultimately pleaded guilty to two charges—conspiracy to defraud, and wire fraud.
The collapse of the project, which failed in 2022, left a $40 billion black hole in the crypto industry and resulted in many investors losing substantial funds.
According to courthouse reporting from Inner City Press, Kwon explained to the judge why he was admitting guilt in the case.
Do Kwon: I made false statements about how the peg was restored, and the role of another firm. I knew my statements were false...
Judge: You agreed with others?
Do Kwon: Yes, with others to engage in a scheme to defraud
Judge: Thank you.— Inner City Press (@innercitypress) August 12, 2025
"Between 2018 and 2022, in the [Southern District of New York] and elsewhere, I knowingly agreed to participate in a scheme to defraud purchasers of cryptocurrencies from my company, Terraform Labs," Kwon told the judge. "I made false statements about how the peg was restored, and the role of another firm. I knew my statements were false."
Kwon further confirmed that he worked with others "to engage in a scheme to defraud," and that he understood that his actions were illegal.
As part of a plea deal, Kwon will pay financial penalties of $19 million in the case. While eligible for a maximum of 25 years in prison, the government said it will push for no more than 12 years as a result of the agreement.
Kwon founded the crypto ecosystem Terra, which had the flagship LUNA token and TerraUSD (UST) algorithmic stablecoin as its main products.
It promised investors huge returns and many used it as a gateway into the world of decentralized finance, or DeFi. LUNA quickly became one of the most valuable crypto coins on the market, reaching a peak market cap of more than $40 billion in April 2022.
But the UST stablecoin failed to keep its stable peg to the U.S. dollar, and when it collapsed, the entire ecosystem crumbled, taking its market cap with it.
Authorities alleged that Kwon conned investors into a sham project to enrich himself, and feds in both the U.S. and Korea have hit him with criminal charges.
The ecosystem's collapse led to a brutal bear market as a number of top crypto projects had exposure to Terra. A number of digital asset firms offering borrowing and lending services (like BlockFi and Genesis) went bankrupt—especially following the subsequent 2022 collapse of crypto exchange FTX—in what experts dubbed "crypto contagion."
Crypto prices plunged in 2022 following Terra's failure, with Bitcoin even nosediving to below $16,000 per coin at one point—nearly 80% lower than what it had traded for in 2021. But most major assets have gradually rebounded, with Bitcoin recently setting a new all-time high mark above $122,800.
Editor's note: This story was originally published on August 11, 2025 and last updated with new details on August 12.