Do Kwon, the co-founder of Terraform Labs, has pleaded guilty in a United States federal court to fraud case charges linked to the dramatic collapse of the TerraUSD and Luna cryptocurrencies. The downfall of the two digital assets in 2022 erased an estimated $40 billion, or about ₹3,505 crore, in investor wealth and became one of the most significant failures in the history of the cryptocurrency market.
The case against Kwon follows his arrest in Montenegro and subsequent extradition to the United States. Federal prosecutors have charged him with nine counts, including securities fraud, accusing him of misleading investors and orchestrating a massive crypto asset securities fraud. US regulators first laid out the allegations in February 2024, stating that Kwon and Terraform Labs misled the public and manipulated the market.
The hearing is set in a Manhattan federal court, where legal experts believe Kwon’s guilty plea marks a turning point in the high-profile case. Kwon had previously pleaded not guilty to all charges but is now expected to formally accept responsibility.
Authorities say the collapse of TerraUSD and Luna triggered a chain reaction in the global crypto sector, eroding investor trust and sparking urgent discussions about stricter rules for digital assets. The case proceedings against Kwon are being closely watched by regulators, market participants, and legal analysts worldwide, as the verdict could set a precedent for how crypto-related fraud is prosecuted and how such assets are regulated in the future.
The outcome of the case is expected to have far-reaching consequences for the creation, marketing, and governance of digital currencies, signalling a more cautious and closely monitored era for the cryptocurrency industry.
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