Three years after the $60 billion collapse of the Terra/Luna ecosystem, Do Kwon, 33, has finally admitted to orchestrating massive fraud around the UST stablecoin in a U.S. court. An admission marking a point of no return for the former DeFi star, once convinced that his project was ‘unshakable’.
An agreement that reduces his sentence… but not his troubles
Initially facing nine charges, including securities and commodities fraud, Kwon faced up to 135 years in prison. By pleading guilty to two major charges, conspiracy to commit fraud and electronic fraud, he negotiated a drastic reduction: a theoretical maximum sentence of 25 years, reduced to the 12 years recommended by the Department of Justice (DOJ). In return, he must admit the facts, return nearly $19.3 million, forfeit several valuable assets, and compensate victims.
But Judge Paul Engelmayer, who presides over the case, is not bound to follow the DOJ’s recommendation. In essence, the final sentence, set for December 11 in Manhattan, could be heavier.
Admissions that confirm suspicions
In 2021, I made false and misleading statements about why UST regained its anchoring.
What I did was wrong, and I want to apologize for my behavior.
In a yellow jumpsuit and handcuffs, Do Kwon admitted to knowingly deceiving UST buyers between 2018 and 2022 in the U.S. and South Korea. He admitted to disseminating false statements about the stablecoin’s ability to regain its dollar peg, while a trading firm intervened to save the peg. His mea culpa contrasts with the past arrogance of the man who, in 2021, was not afraid to ridicule his critics with a viral ‘Have fun staying poor.’
A multi-faceted legal saga
This agreement does not erase the ongoing proceedings in South Korea, where Do Kwon could be judged for similar offenses. He has also been found guilty of civil fraud by a New York jury in a case brought by the SEC, also following the UST implosion.
After his arrest in Montenegro and an extradition battle, he has been detained in the U.S. since January 2025. At the time of his verdict, he will have spent almost a year behind bars in America.
A strong symbol for the crypto market
The Do Kwon case remains one of the most resonant scandals in cryptocurrency history. The collapse of TerraUSD and Luna token triggered a chain reaction: massive losses for investors, cascading platform bankruptcies, and an accelerated wave of regulation worldwide.
In December, the judge will decide between negotiated leniency and exemplary severity…
