Terra Founder Do Kwon Pleads Guilty to Fraud Charges

Three years after the collapse of his crypto empire, Terra founder Do Kwon finally pleaded guilty to fraud charges in New York court Tuesday.

Kwon, donning a yellow prison jumpsuit, appeared before Judge Paul Engelmayer in Manhattan court to accept a negotiated plea agreement with prosecutors. He accepted responsibility for a portion of the charges brought against him and apologized for his actions as details of the plea agreement were read in open court.

Kwon had previously pleaded not guilty to an eight-count indictment charging him with various types of fraud and participating in a conspiracy to mislead investors. As Coinage exclusively covered in our award-winning interview with Kwon in 2022, the charges stem from what Kwon misrepresented to investors before Terra's eventual $40 billion collapse when the UST stablecoin de-pegged.

In court on Tuesday, Kwon pleaded guilty to misleading investors and told Judge Engelmayer that he was aware that what he was doing at the time was illegal.

"What I did was wrong, and I want to apologize for my conduct," Kwon said while reading from a prepared statement. He also acknowledged that he knowingly agreed with others in a scheme to defraud investors.

The admission comes as part of a plea agreement that limits the list of charges in question to just two — conspiracy and fraud charges — and thus, significantly reduces the max prison sentence Kwon could serve. A max sentence before could have been as high as 130 years if Kwon were convicted on all the charges prosecutors originally brought against him. Now, by pleading guilty, Kwon has established a maximum sentence of 25 years.

Prosecutors expanded on the plea deal, explaining that they would also agree to advocate for a maximum sentence of 12 years and that after 50% of Kwon's sentence has been served that the government could endeavor to transfer Kwon to his native South Korea.

Kwon also agreed to forfeitures totalling $19 million, with further restitution for victims still to be discussed at a December sentencing hearing.

By pleading guilty, Kwon also gives up any right to appeal. That's worth noting, considering OpenSea employee Nate Chastain recently won his appeal to overturn what was considered to be the first "insider trading" case involving NFTs. An appeals court ruled that improper jury instructions played a role in that case and vacated the ruling last month.

After the SEC successfully argued their case against Kwon and Terra at trial in 2024, Kwon agreed to pay $80 million as a civil fine.

The next hearing in Do Kwon's case is scheduled for December.

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