Do Kwon is said to plead guilty! After the LUNA crash, he faces nine criminal charges including fraud and Money Laundering.

Terraform Labs founder Do Kwon is rumored to be considering a plea deal. After months of negotiations between the prosecution and defense, they may have reached a plea agreement. (Background: Do Kwon pleads not guilty; Judge: The most complex case of my career, trial date set for January 2026) (Context: Finally? The Ministry of Justice of Montenegro orders Do Kwon to be extradited to the United States, Terra founder's dream of returning to Korea shattered) Terraform Labs co-founder Do Kwon was extradited to the United States for trial at the end of last year, and this significant event, involving the disappearance of $40 billion, seems to have taken a new turn. According to court scheduling, U.S. District Judge Paul Engelmayer will preside over a hearing this Tuesday morning; the judge noted in a notification that the defendant "may change his plea," indicating that Kwon's previous assertion of "not guilty" could be reversed. Do Kwon faces nine criminal charges, including securities fraud, wire fraud, commodity fraud, and conspiracy to commit money laundering. Change in plea: Signs of negotiation emerge According to court documents, the prosecution and defense have been negotiating for months. The judge emphasized in the subpoena that if Kwon chooses to plead guilty, he will be required to make a "narrative plea" in court, which means he will have to detail the elements of the crime. The judge wrote: "I have received notification that the defendant may change his plea." Legal observers pointed out that a narrative plea usually accompanies a plea agreement, where the defendant details the facts in exchange for the dismissal of some charges or seeks a reduced sentence. If an agreement is reached, the case processing timeline will be significantly expedited. From depeg to prosecution: A review of Terra's collapse Some readers may have forgotten or were not involved at the time, so here's a quick explanation. The events trace back to May 2022: the Algorithmic Stablecoin TerraUSD (UST) depegged from the U.S. dollar, triggering a chain reaction of sell-offs, causing the price of the supporting token Luna to plummet, and the entire ecosystem's value nearly dropped to zero, leading to significant losses for users. After the disaster, Kwon's whereabouts became a mystery until he was arrested in Montenegro (Republic of Montenegro) in March 2023 for holding a forged passport. The extradition process took over a year, and he finally arrived in the United States at the end of 2024, where he pleaded "not guilty" to multiple felonies, including securities fraud, market manipulation, and money laundering in January 2025. Outside of the criminal case, the SEC's civil lawsuit has already concluded. In June last year, a U.S. court approved Kwon and Terraform Labs to pay $4.5 billion in fines and restitution, ruling that they committed fraud against investors. Although this ruling is part of a different procedure from the criminal case, it adds to Kwon's legal pressure. Potential impacts If Kwon agrees to plead guilty at the hearing, it will become the first case in the U.S. legal system where a defendant pleads guilty due to the collapse of an Algorithmic Stablecoin. Observers generally believe that the outcome will strengthen regulators' definitions of the responsibilities of stablecoin issuers and set a precedent for future reviews in the DeFi space. For other founders, this incident may highlight the concept of "ultimate responsibility": product design flaws, even if due to algorithms, cannot exempt legal liability. From the investors' perspective, the collapse of Terra has been viewed as a risk education model. Whether the change in plea results in a lighter sentence or not, it serves as a reminder to the market that due diligence should be conducted before pursuing high returns, and the transparency and collateral support of stablecoin mechanisms should be assessed. Related reports: Do Kwon extradited to the U.S. "First court appearance" pleads not guilty; prosecution adds charges of conspiracy to commit money laundering. Do Kwon has been extradited to the U.S.! Facing $40 billion LUNA fraud charges. Do Kwon pleads not guilty; Judge: The most complex case of my career, trial date set for January 2026. This article was first published in BlockTempo, the most influential Blockchain news media.