One of the longest cases in the cryptocurrency industry involving Terraform has concluded with former head Do Kwon admitting guilt.
Plea of Guilt
Jay Clayton, U.S. Attorney for the Southern District of New York, announced that Do Kwon pleaded guilty to one count of conspiracy to commit commodities and securities fraud, as well as one count of wire fraud. This plea took place in front of U.S. District Judge Paul A. Engelmayer.
Fraudulent Operations of Terraform
According to the indictment, the company was founded in 2018 and was known for its algorithmic stablecoins under the 'Terra Protocol.' Kwon exploited promises of a self-stabilizing stablecoin to attract tens of billions of dollars into Terraform's ecosystem. Many of the financial products promoted by the platform did not function as claimed. For instance, the Chai payment platform was found to be using traditional transaction processing methods, while the Mirror Protocol was controlled by Terraform, allowing price manipulations.
Consequences and Court Proceedings
The collapse of Terraform in 2022 resulted in investors losing over $40 billion. Do Kwon was captured in Europe in March 2023 while using a fake passport and was extradited to the U.S. Following his extradition, he pleaded guilty. As part of his plea agreement, he will have to forfeit $19 million in fraudulent proceeds, with sentencing scheduled for December 11, 2025, by Judge Engelmayer.
Do Kwon's admission of guilt underscores the severity of fraudulent schemes in the cryptocurrency industry and their consequences for investors and market participants.
