Do Kwon, the co-founder of Terraform Labs, may be changing his plea in his ongoing criminal case. This development comes amidst scrutiny of the legal proceedings against him in the United States, where he faces multiple felony charges.
Legal Proceedings and Charges
Kwon was arrested in Montenegro in 2023 on charges not directly related to cryptocurrency. Following a protracted legal battle in Montenegrin courts, he was extradited to the U.S. in December to face nine felony counts. These charges include securities fraud, commodities fraud, market manipulation, and money laundering. He initially pleaded not guilty to all charges. As of April, the criminal trial is expected to begin in January 2026.
Potential Impact of Crypto Legislation
Developments in U.S. crypto legislation could influence Kwon's case. Judge Paul Engelmayer, who is overseeing the case in the U.S. District Court for the Southern District of New York, has mentioned being "mindful of the GENIUS Act". The GENIUS Act, or the Guiding and Establishing National Innovation for US Stablecoins, has already passed the US Senate. This legislation, which targets regulations for payment stablecoins, could potentially affect Kwon's charges related to the TerraUSD (UST) algorithmic stablecoin and the platform's LUNA token.
Background
The case stems from the collapse of the TerraUSD (UST) and LUNA ecosystem in 2022, which had a significant impact on the cryptocurrency market. UST's depegging from the dollar is believed to have contributed to the crash, leading to investigations and charges against Kwon and other executives by authorities in both South Korea and the U.S.. In a civil case with the Securities and Exchange Commission (SEC) in 2024, Terraform Labs and Kwon were found liable for defrauding investors.
Market Impact and Community Speculation
The Terra Luna Classic community is keenly observing the legal proceedings, as the outcome could have implications for LUNC, USTC, and LUNA. There is speculation within the community about potential pardons and the reactivation of certain market modules. LUNC's price saw a slight increase recently, though trading volume has decreased.
