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- Terraform Labs co-founder Do Kwon faces a pivotal plea change hearing over the collapse of the Terra ecosystem.
- Kwon may plead guilty to charges, potentially speeding up the resolution of his case tied to the $40B loss.
- Ongoing negotiations with US authorities could lead to a plea agreement in the near future.
Terraform Labs co-founder Do Kwon is at a critical stage of his case. A federal judge has set a conference on Tuesday, at which Kwon could possibly plead differently. The hearing has the potential to bring a significant shift in his case, which is a result of the charges concerning the fall of the Terra ecosystem, according to Bloomberg.
In a Monday filing in the US District Court for the Southern District of New York (SDNY), Judge Paul Engelmayer asked both sides to appear. The court is ready to have Kwon shift his plea to guilty on one or more of the charges against him. Kwon had previously entered not guilty pleas to nine felony charges, which were filed in January and include securities fraud, money laundering, and market manipulation.
Source: Court Listener
Do Kwon’s Legal Battle Over Terra’s $40B Collapse
These indictments are based on the action of Kwon, who instructed the collapse of the Terra ecosystem that liquidated investor assets worth $40 billion. Kwon was arrested and charged in March 2023, although he had gone unaccounted for months after the 2022 crash.
Following his arrest in Montenegro, authorities discovered that he had been using falsified travel documents. His arrest created a legal struggle, with the Kwon team resisting both US and South Korean extradition requests over the course of more than a year. In December 2024, Kwon was extradited to the US.
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Terraform Labs Kwon’s Submission Could Accelerate the Legal Process
According to the filing by Judge Engelmayer, Kwon might be willing to be responsible for certain actions. He has asked the lawyers representing Kwon to file the plea of allocution, a brief account of the charges that Kwon can contest. This is regarded as a measure towards settling the case faster.
Kwon has remained in custody for about seven months. This upcoming plea conference has the potential to move the case much faster. Because it was originally scheduled to be tried in January 2026. A change of plea by Kwon may result in a plea deal or otherwise dispose of some charges. And speeding up the legal process.
Kwon and his attorneys have been engaged in negotiations with the team at the SDNY. Which is led by interim US Attorney Jay Clayton. Reports indicate that these discussions have been fruitful, yet the timing of a potential plea agreement remains uncertain. A possible deal could be given further clarity after the conference held on Tuesday.
This report is after the recent conviction of Roman Storm, one of the founders of Tornado Cash, who has been convicted on charges of running an unlicensed money transmitting business. In 2024, Terraform Labs also settled on the $4.5 billion in penalties with the US Securities and Exchange Commission (SEC).
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