Do Kwon may plead guilty to US fraud charges tied to Terra meltdown

The US District Court for the Southern District of New York will hold a Tuesday conference that could result in Terraform Labs co-founder Do Kwon changing his plea in the criminal case tied to the 2022 Terra ecosystem collapse.

Monday’s order from Judge Paul Engelmayer stated that the court had been informed Kwon “may enter a change of plea.”

The judge instructed Kwon to be prepared to deliver a “narrative allocution” covering all elements of the offenses to which he intends to plead guilty, and encouraged counsel to prepare the statement for reading in open court.

Kwon pleaded not guilty in January to nine felony counts after being extradited from Montenegro to the United States. The charges include conspiracy to defraud, commodities fraud, wire fraud, securities fraud, market manipulation, and money laundering conspiracy.

US prosecutors allege he orchestrated the scheme behind TerraUSD (UST), an algorithmic stablecoin that lost its peg in May 2022, triggering a collapse that wiped out roughly $40 billion in value.

The Terra system paired UST with its governance token Luna through an arbitrage mechanism designed to maintain UST’s dollar peg. The collapse reverberated across global crypto markets, sparking bankruptcies and broader market instability.