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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