US Prosecutors Seek Up to 12 Years in Exchange for Guilty Plea
Kwon's Assets Worth 26.7 Billion KRW to Be Forfeited
Possible Transfer to South Korea After Serving Half of Sentence... Sentencing Set for December
Kwon Do-hyung, co-founder of Terraform Labs, who had been on trial in the United States facing a total of nine charges including fraud related to the issuance of the stablecoin TerraUSD, has changed his stance and pleaded guilty. As a result, federal prosecutors have agreed to significantly reduce the maximum sentence to up to 12 years in exchange for his guilty plea and will drop the remaining seven charges. There is also a possibility that Kwon could be transferred to South Korea after serving part of his sentence in the United States.
According to local media such as The Wall Street Journal (WSJ) and Bloomberg News on August 12 (local time), Kwon admitted to two charges-conspiracy to commit fraud and wire fraud-during a pretrial hearing at the U.S. District Court for the Southern District of New York held that day.
Under the plea bargain agreement, Kwon agreed to the forfeiture of $19.3 million (approximately 26.7 billion won) and certain real estate assets to the prosecution.
In court, he stated, "I intentionally conspired with others to commit fraud and did in fact deceive buyers of the cryptocurrency issued by Terraform Labs," adding, "I apologize for my actions and will take full responsibility."
Under U.S. law, the statutory maximum sentence for conspiracy to commit fraud is five years, and for wire fraud, it is 20 years, making a total possible sentence of 25 years. However, under the current agreement, prosecutors plan to seek a maximum sentence of only 12 years. In addition, if Kwon serves half of his sentence and complies with the terms of the agreement, the U.S. Department of Justice will support his transfer to South Korea through the International Prisoner Transfer Program to serve the remainder of his sentence.
However, Judge Paul A. Engelmayer repeatedly emphasized that Kwon could still be sentenced to up to 25 years in prison.
The sentencing hearing for Kwon is scheduled for December 11, 2025.
Terra is a stablecoin issued by Terraform Labs, which is headquartered in Singapore. In the spring of 2022, its collapse resulted in investor losses amounting to approximately $40 billion (about 55 trillion won). The incident heightened instability across the cryptocurrency market at the time and later contributed to the collapse of the cryptocurrency exchange FTX.
Kwon is currently facing charges in both South Korea and the United States. In March 2023, he was arrested in Montenegro on charges of passport forgery while attempting to board a flight to Dubai, and served time there before being extradited to the United States in January of this year. In June of last year, he agreed to pay $4.47 billion in disgorgement and fines to the U.S. Securities and Exchange Commission (SEC) and victims as compensation.
The U.S. Attorney's Office for the Southern District of New York indicted Kwon in 2023 on a total of nine charges, including securities fraud, wire fraud, commodities fraud, and conspiracy to manipulate market prices, later adding a charge of conspiracy to commit money laundering. If convicted on all counts, he could have faced up to 130 years in prison. However, after initially pleading not guilty at his arraignment following extradition to the United States, Kwon has now changed his plea.
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