Do Kwon May Change Plea in US Fraud Case, Judge Schedules Tuesday Hearing

Terraform Labs co-founder Do Kwon may change his plea in the ongoing US fraud case related to the 2022 collapse of the TerraUSD stablecoin, according to a federal judge’s recent order. Judge Paul Engelmayer of the Southern District of New York (SDNY) scheduled a hearing for Tuesday in New York, during which Kwon “may enter a change of plea”.

Kwon, who initially pleaded not guilty to nine felony charges in January, has been instructed to be prepared to provide a detailed narrative explaining the elements of any offences he admits to. 

The charges include securities fraud, market manipulation, money laundering, and wire fraud, all connected to his leadership role at Terraform Labs and the dramatic US$40 billion (AU$61.38 billion) collapse of the Terra ecosystem.

Related: Ripple–SEC Legal Battle Ends as Both Sides Drop Appeals

Legal Battle and Arrest Details

Following his arrest in Montenegro in March 2023, after attempting to travel on a falsified passport, Kwon faced a lengthy legal battle against extradition to the US and South Korea before finally being transferred to US custody in December 2024. He has been held without bail since his arrival.

Before this hearing, a trial was scheduled to begin in January 2026, with prosecutors needing to review six terabytes of data as part of their discovery process. 

The judge’s order also mentioned that Kwon’s defence lawyers should have reviewed any potential plea agreement with him in advance. Prosecutors in the SDNY, led by interim US Attorney Jay Clayton, have reportedly engaged in productive discussions with Kwon’s legal team over the past months.

Terraform Labs previously settled a civil fraud lawsuit with the US Securities and Exchange Commission in 2024, agreeing to pay approximately US$4.5 billion (AU$6.91 billion) in disgorgement fines, penalties, and prejudgment interest. The Terra network’s collapse was a major event in the crypto sector, severely affecting investor confidence and wiping out billions in value.

This plea hearing could mark a significant development in one of the most high-profile cryptocurrency fraud cases and may also influence related proceedings in South Korea, where Kwon faces separate charges.

Related: Australian Money Laundering Scheme Busted: A$190M Converted to Crypto

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