Sudden Change in Stance Raises Speculation of Pardon
Pro-Cryptocurrency Trump Administration Policy Emerges as a Key Factor
Bloomberg and other media outlets reported on the 11th (local time) that Kwon Dohyung, founder of Terraform Labs, who is currently facing criminal trial in the United States on nine charges including fraud related to the issuance of the stablecoin 'Terra USD,' is expected to change his plea to guilty.
On the same day, Judge Paul Engelmayer of the U.S. District Court for the Southern District of New York announced that he had been notified that Kwon may change his plea, and stated that an emergency hearing would be held in court on the morning of the 12th.
Kwon Dohyung, CEO of Terraform Labs, heading to Podgorica District Court in Podgorica, the capital of Montenegro, in 2023. Photo by Yonhap News
The U.S. Attorney's Office for the Southern District of New York indicted Kwon on eight charges, including securities fraud, wire fraud, commodities fraud, and conspiracy to manipulate market prices, immediately after his arrest in Montenegro in March 2023. After securing his extradition from Montenegro at the end of last year, prosecutors added a charge of conspiracy to launder money. If convicted on all nine charges, Kwon faces a maximum sentence of 130 years. At the arraignment hearing in early January, Kwon pleaded not guilty to all charges.
If Kwon accepts a plea bargain-an agreement that can reduce or adjust the sentence in exchange for a guilty plea-and the judge approves it, the trial for those charges will move directly to sentencing, skipping further proceedings on guilt or innocence.
The trial was originally expected to begin in February next year due to the extensive analysis and translation of evidence, with a verdict anticipated only after that. However, Kwon's sudden change of stance has fueled speculation that he may be seeking a pardon. Some in the cryptocurrency industry predict that Kwon could request a pardon from President Trump, who is known for his pro-cryptocurrency policies.
Recently, U.S. government agencies have shown a more favorable attitude toward the cryptocurrency industry. The U.S. Securities and Exchange Commission (SEC), which had been in a legal dispute with Ripple Labs-the issuer of the cryptocurrency Ripple (XRP)-over alleged violations of securities laws, recently withdrew its lawsuit after changing its position.
The leadership of the prosecution has also changed to officials from the Trump administration. Jay Clayton, who served as SEC Chairman during Trump's first term, has become the U.S. Attorney for the Southern District of New York and is known for his pro-cryptocurrency stance. In addition, the federal prosecutor who played a key role in Kwon's case has left the prosecution.
The passage of the 'Genius Act' in the U.S. Congress last month has also created a more favorable environment for Kwon. During a pretrial conference in June, Judge Engelmayer asked Kwon's team whether the then-pending Genius Act would affect the trial, and his attorney replied, "Of course, it will have an impact."
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