The co-founder of Terraform Labs previously denied charges including securities fraud, market manipulation, money laundering, and electronic fraud in January. However, U.S. District Judge Paul Engelmayer of the Southern District of New York scheduled a conference where Kwon may change his defense. This indicates that Kwon is preparing to alter his position on all or some of the charges. 

After an ongoing restitution case in Montenegro, Do Kwon was extradited to the U.S. Having been held without bail for nearly seven months, Kwon will appear in court before changing his defense. Judge Engelmayer requested Kwon to provide a statement encompassing all elements of the charges he intends to admit. Additionally, he encouraged attorneys to assist Kwon in preparing the defense statement to be read at the hearing. 

Critical Steps and Potential Deal in Luna Case 

The Terraform Labs co-founder was charged due to his role in the $40 billion investor asset collapse in March 2023. Kwon’s lawyers and the U.S. Attorney’s Office have held productive talks for months. This process is seen as a signal of a possible settlement. At the hearing conference on Tuesday, Kwon will change his defense and announce his new stance regarding the charges. 

Recently, the same district court convicted Roman Storm, co-founder of Tornado Cash, for operating an unlicensed money transfer service. Terraform Labs settled a separate case with the U.S. Securities and Exchange Commission in 2024, agreeing to pay around $4.5 billion in penalties and legal sanctions. This ruling stands as the most concrete example of sanctions applied after the Luna ecosystem collapse. 

In conclusion, Do Kwon’s admission of guilt on August 12 marks a critical turning point in the case. The cancellation of the January 2026 trial increases the likelihood of a settlement. These developments are crucial for the future of the Luna and Terraform Labs cases. 

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The court ordered Crews to return $530,000 in net profits. Additionally, Crews must pay approximately $51,000 in interest and a $530,000 civil penalty. He has also been permanently barred from violating securities laws. The SEC achieved this victory despite reduced crypto enforcement during the Trump administration. The agency claimed Crews operated a crypto fraud scheme through two entities, Four Square Biz and Stem Biotech, between October 2019 and May 2021. During this period, he and his partners raised about $800,000 from nearly 200 investors using a digital asset called “Stemy Coin.” Most of the investors were African-American individuals and members of church communities. 

Stemy Coin: Unveiling the Stem Cell Crypto Scam

Crews promised to refund unaccredited investors, but failed to fulfill that commitment. The SEC highlighted that Crews did not take reasonable steps to verify the financial status of investors and lacked personal financial information on most of them. These oversights jeopardized investor safety and led to violations of securities laws. Investigations confirmed that Stemy Coin had no real product or technology, exposing the project as a complete scam. 

To persuade investors, Crews made false claims, stating the token was backed by stem cell technology and assets like gold. He also claimed partnerships with laboratories, products, stem cell treatments, and doctors, all of which turned out to be fabricated. The SEC successfully demonstrated the falsity of these claims. 

Investigations revealed that the companies produced neither products nor technologies, and there was no evidence of labs or scientific studies. The SEC emphasized that these actions violated several provisions of the Securities Act and Exchange Act. 

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