The legal battle surrounding Terraform Labs is set to reach a new chapter as its co-founder, Do Kwon, prepares pleaded guilty in a New York courtroom this week.
UPDATED: The Terraform Labs co-founder pleaded guilty on two federal charges — conspiracy to defraud and wire fraud and is facing 25 years in prison.
Kwon was once at the center of one of the fastest-growing projects in the crypto sector. Terraform Labs, based in Singapore, launched TerraUSD, a stablecoin pegged to the U.S. dollar, and Luna, a companion token that soared in value during 2021.
Prosecutors allege that behind the scenes, Kwon orchestrated deceptive measures to maintain TerraUSD’s $1 price, including a secret agreement with a high-frequency trading firm to buy millions of tokens when the peg broke.
Publicly, however, he credited the rebound to Terra’s algorithmic design.
The strategy, authorities claim, enticed both everyday traders and large institutions to invest heavily, propelling Luna’s market cap to around $50 billion before the ecosystem’s dramatic collapse in 2022 wiped out approximately $40 billion in value.
This criminal case follows a major settlement in 2024, when Kwon and Terraform agreed to pay $80 million in fines and accept a $4.55 billion SEC judgment, which also banned him from participating in any future cryptocurrency ventures.
Kwon has been in U.S. custody since being extradited from Montenegro late last year, joining a growing list of high-profile crypto executives facing prosecution after the industry’s sharp downturn in 2022 triggered a wave of bankruptcies and fraud investigations.
Source: Reuters
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