Do Kwon Archives - Coin Engineer

Do Kwon Sentenced to 15 Years for $40B Crypto Scandal

Yeliz Akmaca — Fri, 12 Dec 2025 07:00:40 +0000

Do Kwon, co-founder of Terraform Labs, was sentenced to 15 years in prison following the collapse of the digital currencies TerraUSD and Luna. U.S. District Judge Paul Engelmayer in the Southern District of New York ruled that Kwon misled investors, causing massive financial losses. Court documents indicate his actions led to approximately $40 billion in losses, affecting thousands of investors.

Kwon pleaded guilty to charges of fraud and conspiracy to commit wire fraud. Engelmayer noted that when UST lost its peg in May 2021, Kwon falsely claimed that an algorithm had restored its value, while secretly arranging for a trading firm to purchase millions of dollars in UST to artificially inflate its price. The judge also criticized Kwon’s mocking behavior on social media, citing a Twitter post where he belittled investors.

Court Proceedings and Kwon’s Flight Attempts

During the trial, Engelmayer reviewed Kwon’s attempts to evade the law. Kwon traveled on false passports to Serbia and Montenegro before being caught en route to Dubai. The court described this as “despicable,” especially since he publicly encouraged retail investors to hold UST while he and close associates exited their positions.

Following the sentencing, Jay Clayton, head of the Southern District of New York for the U.S. Department of Justice, stated: “Do Kwon devised complex schemes to mislead investors and inflate the value of Terraform’s cryptocurrencies for his own benefit. Once exposed, he conducted a deceptive PR campaign, laundered proceeds from illegal schemes, and attempted to seek political protection abroad. Fraud is fraud, and our office will relentlessly pursue justice for investors, regardless of where perpetrators flee.”

In August, Kwon admitted to conspiring to commit commodities fraud, securities fraud, and wire fraud connected to Terraform Labs’ operations. In court, he acknowledged that he knowingly participated in a plan to defraud UST buyers. Kwon also expressed remorse: “I want everyone to know I have spent all my time thinking about what I could have done differently and what I can do now. It has been four years since the incident, and I haven’t seen my family in three. I want to serve my restitution in my own country.”

Investors and Legal Implications

Judge Engelmayer deemed the defense’s requested five-year sentence “utterly unreasonable.” He said even the government’s suggested 12-year term would not sufficiently deter Kwon or future fraudsters.

Factors considered in the court’s decision included:

Total funds lost and number of victims
Kwon’s attempts to evade the law
Misleading and mocking conduct on social media
Deceiving investors while protecting personal positions

The Terraform collapse is now recorded as one of the largest scandals in crypto history, and Kwon’s sentence sets a significant precedent for the digital asset industry.

You can also freely share your thoughts and comments about the topic in the comment section. Additionally, don’t forget to follow us on our Telegram, YouTube, and Twitter channels for the latest news and updates.

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Do Kwon to Plead Guilty to Two Charges Over Crypto Collapse

Emre Yumlu — Tue, 12 Aug 2025 15:00:40 +0000

Terraform Labs co-founder Do Kwon is set to plead guilty in a U.S. court to two charges — “conspiracy to defraud” and “wire fraud” — in connection with the $40 billion collapse of the TerraUSD (UST) stablecoin in 2022. This decision marks a major turning point after Kwon had previously denied all allegations.

Do Kwon’s Guilty Plea and Latest Developments

During the U.S. court hearing, the judge confirmed that Do Kwon will admit guilt to the two main charges of conspiracy to defraud and wire fraud. This development is considered a critical step in the legal process surrounding the collapse of TerraUSD, which sent shockwaves through the crypto market.

The TerraUSD Crisis and Do Kwon’s Legal Journey

In 2022, TerraUSD (UST) — a stablecoin with a market value of $40 billion — and its sister token Luna collapsed, creating a massive shock in the crypto market. Billions in investor funds were wiped out, many firms went bankrupt, and the broader market entered a deep crisis.

Following the collapse, Do Kwon faced multiple serious charges including fraud, market manipulation, money laundering, and wire fraud. In 2023, he was arrested in Montenegro while attempting to flee with a forged passport and was held for nearly a year before being extradited to the United States.

In April 2025, the U.S. Securities and Exchange Commission (SEC) sued Kwon and Terraform Labs, accusing them of misleading investors. Kwon agreed to pay $4.47 billion in damages and liquidate company assets to compensate victims.

A Key Turning Point for the Crypto Industry

Kwon’s guilty plea is seen as one of the most significant legal moments in the history of altcoin and blockchain-related cases. It also reflects growing regulatory scrutiny over algorithmic stablecoins and complex financial models.

The case highlights the challenges of prosecuting cross-border crypto crimes. The jurisdictional dispute between the U.S. and South Korea revealed just how complicated regulation and enforcement can be in a market without clear geographic boundaries.

Also, you can freely share your thoughts and comments about the topic in the comment section. Additionally, don’t forget to follow us on our Telegram, YouTube, and Twitter channels for the latest news and updates.

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South Korea Moves To Legalize Stablecoins With Bold Crypto Bill

Yigit Taha OZTURK — Tue, 10 Jun 2025 07:30:53 +0000

In a region already buzzing with digital innovation, South Korea is positioning itself to become a dominant force in the crypto economy. A shift in political leadership has triggered a wave of regulatory reform that could reshape the market entirely.

New President Acts Fast On Stablecoin Promise

Following his recent election win, President Lee Jae-myung has wasted no time delivering on campaign pledges around crypto. His ruling Democratic Party has introduced the “Digital Asset Basic Act,” aiming to permit the issuance of domestic stablecoins and foster a transparent, competitive crypto landscape.

Under the proposal, local companies will be allowed to issue stablecoins if they have a minimum equity capital of 500 million won ($368,000). Issuers must also maintain reserves to back the coins and receive approval from the Financial Services Commission, South Korea’s top financial regulator.

You Might Be Interested In: Elon Musk Talks About the Name of a New Memecoin!

The legislation seeks to legitimize stablecoin markets and drive broader adoption by ensuring regulatory clarity and investor protection.

Crypto Gains Mass Appeal Across South Korea

Interest in Bitcoin and stablecoins has soared in South Korea. In Q1 of 2024 alone, transactions involving major U.S. dollar stablecoins totaled 57 trillion won ($42 billion) across the country’s five leading exchanges, according to Bank of Korea data.

An estimated one-third of the South Korean population—around 18 million people—is now involved in the crypto market. Building on this momentum, President Lee is also pushing for Bitcoin ETF approvals and the inclusion of Bitcoin in the national pension fund’s investment strategy.

However, these ambitions face resistance from the Bank of Korea, which argues that private stablecoins could undermine the effectiveness of monetary policy.

Crypto Law Boosts Stocks, But Not Without Skepticism

Anticipation around the bill has already impacted financial markets. Shares in digital wallet provider KakaoPay surged up to 45% in five days following the announcement. Still, JPMorgan analysts caution that the rally may be premature, with real benefits from the legislation yet to materialize.

Despite the uncertainty, South Korea’s proactive legislative push sets a bold precedent in Asia’s ongoing crypto regulatory race.

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Do Kwon’s Extradition from Montenegro Has Been Postponed Once Again

Orhan — Sat, 19 Oct 2024 13:45:26 +0000

The extradition of Do Kwon, known as the figure behind the collapse of Terra Luna, has once again fallen into uncertainty in Montenegro. The Constitutional Court, upon reviewing an appeal filed by Kwon’s lawyers, has temporarily halted his extradition process. This decision suspends the previous ruling by the Montenegrin High Court, which granted the Minister of Justice the final authority to decide on Kwon’s extradition.

According to information published on the Constitutional Court’s website, the court announced that the extradition process has been postponed until a final decision is made. This development came after Kwon’s legal team submitted an appeal on September 25 against the High Court’s decision, which the court accepted. Dan newspaper reported that this appeal prevents Minister of Justice Bojan Božović from exercising his final decision on the extradition.

Following the postponement, the Montenegrin Ministry of Justice expressed a desire for the Constitutional Court to address the case swiftly and requested to be kept informed of future developments. Minister Božović had stated that he had made his decision regarding where Kwon would be extradited and that it would be announced by the end of the week. However, today’s announcement marks the third postponement of Kwon’s extradition, and this decision has been registered as Kwon’s sixth appeal.

Kwon’s extradition is set to be either to South Korea or the United States, but the latest delay has sparked significant reactions in the crypto world. In a ruling issued in September, the Montenegrin High Court stated that previous decisions by the High Court and the Court of Appeal in response to Kwon’s earlier appeals were legally flawed. This complex legal process adds further uncertainty regarding the charges Kwon faces.

It remains unclear how Kwon’s legal case will unfold and to which country he will ultimately be extradited. The crypto community is closely following the outcome of this ongoing process.

You can also freely share your thoughts and comments about the topic in the comment section. Additionally, don’t forget to follow us on our Telegram, YouTube, and Twitter channels for the latest news and updates.

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Terraform Labs Closes Operations Amid Bankruptcy

Tanju Akbıyık — Sat, 21 Sep 2024 12:00:42 +0000

Reporting from Reuters indicates that another chapter closed for Terraform Labs following the company’s bankruptcy court clearance of closure of operations.

According to Terraform, the company behind the well-known algorithmic stablecoin Terra, bankruptcy will pay around $184.5 million and $442.2 million to stakeholders.

The company’s case was taken before the U.S. Securities and Exchange Commission; its wind-down follows Terraform closing another chapter.

Over the algorithmic stablecoin Terra USD (UST), which failed a year earlier, the SEC prosecuted Terraform and co-founder Do Kwon in February 2023. The government claimed the company misled and stole from investors. Both sides were haggling over minute details before the conclusion. While the SEC has requested they pay $5.3 billion, lawyers for Terraform and Kwon claimed fines should be closer to $1 million.

Terraform Labs agreed to pay fines to the U.S. District Court for the Southern District of New York totaling $4.7 billion in June. Terraform promised to pay $3.58 billion in disgorgement, $420 million in a civil penalty, and would prevent Kwon from serving as an officer or director of any public company as part of the deal.

As part of the bankruptcy process, the SEC stated it would obtain its claim once creditors were paid.

“Under the liquidation terms of the Chapter 11 Plan that Terraform is required to propose, the SEC will recover on its claim after harmed investors and other general unsecured creditors recover in full. If all Terraform’s assets are distributed pursuant to such a plan, the SEC’s monetary remedies will be deemed satisfied,” the agency stated in June’s settlement papers.

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Terraform and Do Kwon Settlement with SEC Announced

Tanju Akbıyık — Thu, 30 May 2024 20:30:08 +0000

A court record notes that Terraform Labs and co-founder Do Kwon “reached a settlement in principle” with the U.S. Securities Exchange Commission (SEC).

An entry posted on Thursday indicated that a previously scheduled oral argument intended for May 29 had been canceled and that a non-recorded telephone conference on Wednesday had also been called off.

“The oral argument previously set for 5/29/2024 has been canceled because the parties have informed the Court that they reached a settlement in principle,” the petition states. “The parties must file, by 6/12/2024, papers in support of a proposed final judgment consistent with the settlement.”

Over the algorithmic stablecoin TerraUSD (UST), which crashed a year earlier, the SEC prosecuted Terraform and Kwon in February 2023. Only a few weeks ago, both sides were debating minute quantities. While the SEC has recommended they pay $5.3 billion, lawyers representing Terraform and Kwon said fines should be closer to $1 million.

Even without Kwon, the Terraform trial against the SEC began in late March. April saw Terraform and Kwon found guilty of civil fraud after a jury determined they misled investors. The jury mostly looked at the SEC’s allegations that Kwon and Terraform engaged in fraud linked to the purchasing and selling of Terraform shares, therefore breaching federal securities laws.

The former executive has been caught entangled in a back-and-forth between being extradited to the United States or South Korea. Using a fake passport while trying to leave Montenegro, Kwon was detained in March 2023.

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Montenegrin Minister of Justice and YSK Representatives Met for Do Kwon

Tanju Akbıyık — Thu, 23 May 2024 14:00:52 +0000

Montenegro’s Minister of Justice recently met with representatives from the U.S. SEC to discuss crypto legalities and the investigation surrounding Do Kwon, the former Terraform Labs leader. Kwon, who is still in Montenegro awaiting an extradition decision, has been the subject of ongoing legal proceedings.

During the meeting, the SEC provided Minister Andrej Milović with details of their investigation into Kwon, as well as updates on the court proceedings against him in the U.S. While specific details of the discussion were not disclosed, it may indicate progress in Kwon’s extradition process, which has faced delays.

The extradition decision has been a point of contention, with debates over whether Kwon should be sent to the U.S. or his native South Korea. Montenegro’s Supreme Court ruled in early April that the decision rests with the justice minister, not the court, following objections from Montenegro’s prosecutors to Kwon’s initial extradition order to South Korea in March.

Kwon and Terraform Labs were previously found liable for civil fraud by a U.S. jury in a case brought by the SEC in February 2023, related to the collapse of the algorithmic stablecoin Terra USD (UST) a year earlier.

Kwon’s legal troubles began in March last year when he was arrested in Montenegro for using forged travel documents. After completing his prison term on March 23, 2024, Kwon was reportedly transferred to a reception center for foreigners, with his passport confiscated by local authorities.

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SEC Charges Terraform Labs and Do Kwon with $4 Billion Fraud

Tanju Akbıyık — Thu, 02 May 2024 12:00:48 +0000

Charges have been pressed by the US Securities and Exchange Commission against Terraform Labs and its CEO Do Kwon. The SEC alleges that they stole over $4 billion using unregistered token sales. LUNA and UST are widely known cryptocurrency tokens.

In 2022, when UST lost its peg to the US dollar, the value of algorithmically issued UST fell by $40 billion in market price. The legal team of Terraform repudiated the allegations of the SEC and agreed to pay a penalty of $5.3 billion.

Terraform Lawyers Dispute SEC Charges in Fraud Case

The disagreement climaxed on April 5, 2024, when Terraform and Kwon were declared guilty of fraud by a New York jury. The final day of the two-week trial may see punishment for the cryptocurrency sector.

Still, Terraform lawyers think that most UST stablecoin sales took place outside the USA. They argue that the SEC hasn’t demonstrated a connection between Terraform’s small U.S. operation and the substantial financial losses.

The SEC asks for financial metrics following the reference, claiming that they will define a business model. As has been mentioned, the commission recommended unambiguous and efficient language concerning wrongdoing in relation to cryptocurrency. Nevertheless, Terraform lawyers assert that the penalty is excessive and that it cannot be justified, suggesting that the clients should be awarded $1 million in monetary compensation.

The defense of Terraform is based on its global economic expansion. On May 1, 2024, Terraform attorneys replied, saying that the SEC lacked power and evidence. They mostly argued that the majority of transactions took place outside of US territory and did not deserve that much punishment.

The defense counsel contended that everything was done in Korea and Singapore. He emphasized that his role in allied actions would have the most unpredictable effect on U.S. actions. Terraform was quick to disrupt the SEC’s story in yet another filing. The lawyers of the firm criticized the SEC for failing to provide any proof involving the suspected ones and the huge losses it indicated.

SEC Stresses Crypto Compliance in Fraud Case Ruling

Gurbir Grewal, SEC Enforcement Division head, welcomed the court’s finding. Grewal reiterated the need for crypto industry compliance and noted the recent investor losses. He said that the decision is vital for the designer of a regulatory framework that rewards those who serve the public good and discourages bad actors.

This judicial decision shows that the US cryptocurrency business is being carefully researched and regulated. If the retrial yields an undetermined verdict, it will affect Terraform Labs’ operations and how other crypto companies interact with and comply with the regulatory regime, particularly international operations.

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Terraform and Do Kwon Challenge SEC’s $5.3 Billion Fine

Tanju Akbıyık — Tue, 30 Apr 2024 09:45:48 +0000

Lawyers representing Terraform Labs and its co-founder, Do Kwon, are contesting the proposed fines from the U.S. Securities and Exchange Commission (SEC), arguing that a penalty closer to $1 million is more reasonable than the proposed $5.3 billion.

The SEC‘s proposal includes a demand for about $4.7 billion in disgorgement and prejudgment interest, along with civil penalties of $420 million for Terraform and $100 million for Kwon. However, the lawyers representing the defendants believe that these figures are excessively high.

In a court filing posted late last week, Terraform and Kwon’s legal team argued for a significantly lower penalty. They stated that the court should not grant injunctive relief or disgorgement and should, at most, impose a $1 million civil penalty against Terraform Labs (TFL).

The SEC charged Terraform and Kwon in February 2023 over issues related to the algorithmic stablecoin Terra USD (UST), which experienced a dramatic collapse in value a year earlier. Terra USD, linked to the governance token luna, aimed to maintain price stability through algorithmic market incentives. However, in May 2022, UST crashed, resulting in losses exceeding $50 billion.

A jury recently found both Terraform and Kwon liable for civil fraud, based on allegations that they misled investors. Key issues examined by the jury included claims by the SEC that Terraform and Kwon violated federal securities laws through fraudulent activities related to the trading of Terraform securities. Additionally, Judge Jed Rakoff had previously granted summary judgment to the SEC, supporting claims that Terraform and Kwon offered and sold unregistered securities.

Following the verdict, a spokesperson for Terraform stated that the company is carefully evaluating its options and considering its next steps in response to the legal proceedings.

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Terra Luna Founder Do Kwon Released to House Arrest, LUNA and LUNC Prices Surge

admin — Sat, 23 Mar 2024 13:43:43 +0000

Do Kwon, the founder of the Terra (LUNA) ecosystem, has been released to house arrest by a Montenegrin court after nearly a year in detention.

The court’s decision comes after previous reports suggested that Kwon would be extradited to South Korea rather than the United States. However, this decision was suspended by the Montenegrin court in light of recent developments.

The lenient sentence for Kwon has sparked a surge in the prices of related cryptocurrencies. LUNA and LUNC, the two main tokens associated with the Terra ecosystem, have seen increases of 15% and 11%, respectively.

Kwon’s Terra Luna and TerraUSD projects collapsed in May 2022, along with Terra’s algorithmic stablecoin UST, causing billions of dollars in losses for investors.

The fact that Kwon has not been severely punished after causing billions of dollars in losses to investors has drawn criticism from the cryptocurrency community.

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