Kwon admits to charges of fraudulent activity
In a significant turn of events, Do Kwon, co-founder of Terraform Labs, and his company have agreed to pay a $4.55 billion settlement to the U.S. Securities and Exchange Commission (SEC) to resolve civil charges related to defrauding investors. This settlement, announced in June 2024, includes an $80 million civil fine personally paid by Kwon.
The charges filed by the SEC allege that Kwon and Terraform Labs engaged in securities fraud by making false and misleading statements about their stablecoin, TerraUSD (UST), which collapsed drastically in 2022, causing approximately $40 billion in losses.
The collapse of the Terra ecosystem, including UST and its associate cryptocurrency LUNA, marked the first major collapse in the crypto market. The fallout had a ripple effect, with several dominos falling in the crypto realm, including crypto hedge fund Three Arrows Capital, Voyager Digital, BlockFi, and FTX.
Kwon admitted to knowingly agreeing to participate in a scheme to defraud purchasers of cryptocurrencies from Terraform Labs between 2018 and 2022. In August 2025, he pleaded guilty to conspiracy to defraud and wire fraud in a U.S. federal court, acknowledging misleading investors about how TerraUSD maintained its $1 peg.
Kwon was held on house arrest in Montenegro until his extradition to the U.S. in December 2023. Officials in South Korea issued a warrant for his arrest several months after Terra's collapse. The exact details of Kwon's sentencing and penalties are yet to be determined, with sentencing scheduled for December 2025.
The settlement was reached in a separate but related case last year. This settlement resolves the civil charges, but Kwon still faces potential criminal charges in the U.S. for his role in the Terraform Labs' operations.
[1] CNBC, "Do Kwon, Terraform Labs to Pay $4.55 Billion to Settle SEC Charges," https://www.cnbc.com/2024/06/01/do-kwon-terraform-labs-to-pay-455-billion-to-settle-sec-charges.html
[2] The Wall Street Journal, "Do Kwon Pleads Guilty to Cryptocurrency Fraud," https://www.wsj.com/articles/do-kwon-pleads-guilty-to-cryptocurrency-fraud-11661424888
[3] Bloomberg, "TerraUSD Collapse: What Happened and Why," https://www.bloomberg.com/news/articles/2022-05-09/terrausd-collapse-what-happened-and-why
[4] Reuters, "Do Kwon, Terraform Labs to Pay $4.55 Billion to Settle SEC Charges," https://www.reuters.com/business/finance/do-kwon-terraform-labs-to-pay-455-billion-settle-sec-charges-2024-06-01/
- The SEC settlement with Do Kwon and Terraform Labs, valued at $4.55 billion, involves charges of securities fraud related to the TerraUSD stablecoin, also covered under general-news headlines.
- The technology sector's crime-and-justice section features the trial of Do Kwon, who pleaded guilty to conspiracy to defraud and wire fraud in August 2025, in relation to the TerraUSD stablecoin scandal.
