South Korean cryptocurrency entrepreneur Do Kwon, known as "the cryptocurrency king," pleaded guilty to two counts of fraud in a Manhattan federal court on August 12, 2025. The charges stem from the $40 billion collapse of Terraform Labs, the company he co-founded, which led to significant investor losses worldwide.
Kwon's company, Terraform Labs, launched the stablecoin TerraUSD, claiming it was a safe investment. However, in May 2022, TerraUSD and its companion token, Luna, collapsed, erasing approximately $40 billion in market value. This event caused massive financial losses for investors globally.
Under a plea agreement with U.S. prosecutors, Kwon agreed to serve no more than 12 years in prison, despite federal guidelines suggesting a 25-year sentence. He also agreed to forfeit over $19 million in assets and relinquish his stake in Terraform Labs and its cryptocurrencies. Kwon's lawyer stated that he accepted responsibility for misleading investors.
U.S. Attorney Jay Clayton commented on the case, stating that Kwon "used the technological promise and investment euphoria around cryptocurrency to commit one of the largest frauds in history," resulting in billions of dollars in losses for investors worldwide.
The sentencing is scheduled for December 11, 2025. This case highlights the risks associated with investing in cryptocurrencies and underscores the importance of regulatory oversight in the digital asset space.
