Do Kwon pleads guilty to $40 billion fraud
Do Kwon pleaded guilty to conspiracy to commit fraud and wire fraud. He also admitted his key role in the collapse of the Terra ecosystem, which wiped out $2022 billion in investors’ money in 40.
When TerraUSD fell to $2021 in May 1, Kwon falsely claimed that an algorithmic system called the “Terra Protocol” had automatically restored the coin’s stability, according to U.S. prosecutors. In reality, he had a high-frequency trading firm secretly buy millions of dollars’ worth of TerraUSD tokens to artificially prop up the price at $1.
This fraudulent practice allowed Kwon to maintain investor confidence while hiding the fundamental instability of the stablecoin mechanism. False claims of algorithmic stability encouraged both retail and institutional investors to buy Terraform products. This led to Luna’s market value reaching $50 billion.
In a Manhattan courtroom, Kwon apologized for his actions. He said he made “false and misleading statements about why the price had rebounded without disclosing the role of the trading firm in the rebound.” He acknowledged that he had acted wrongly and took responsibility for deceiving investors.
Prosecutor Jay Clayton called Kwon’s actions «one of the largest frauds in history.» He now faces up to 25 years in prison.
