Kwon Do-hyung, the founder of Terraform Labs, who is undergoing a criminal trial in the United States related to allegations of fraud concerning Terra stablecoins, has a higher possibility of admitting guilt. He is scheduled to appear at the U.S. District Court for the Southern District of New York on the morning of the 12th and is expected to change his stance during the trial and admit guilt.
Paul Engelmeier, a judge at the U.S. District Court for the Southern District of New York, announced on the 11th that Kwon had been informed he could change his plea regarding the trial. Accordingly, emergency consultations are expected to take place in court.
Kwon was arrested in Montenegro in March 2023 and has been indicted by U.S. federal prosecutors on a total of eight charges, including securities fraud, wire fraud, commodity fraud, and conspiracy to manipulate the market. After being extradited from Montenegro, he also faced additional charges of conspiracy to commit money laundering. If all these charges are found guilty, Kwon could face up to 130 years in prison.
Kwon appeared at a hearing in U.S. court in early January and asserted his innocence regarding all criminal charges. However, it was later noted that if he accepts a plea bargain—an agreement for a reduced sentence in exchange for admitting guilt—proceedings regarding the related charges would conclude, and the case would move to sentencing.
The main trial of Kwon's case is set to begin in February of next year, with many court procedures having already taken place prior to that. The prosecution has requested sufficient time, citing the extensive evidence and the need for data decryption and translation of communication materials from Korean.
In the U.S. cryptocurrency industry, there are speculations that Kwon's criminal trial could be influenced by the pro-cryptocurrency policies of the Donald Trump administration. Notably, some in the industry predict that Kwon might request a pardon from President Trump.
Meanwhile, a bill related to Kwon's case, the "Genius Act," passed last month in the U.S. Congress, creating favorable conditions for Kwon. This law establishes a new framework for stablecoin regulation, and Kwon's attorney noted the impact of this law in pre-trial discussions.
Terraform Labs claimed to have issued a stablecoin pegged to $1 through the "Terra Protocol" algorithm, but in reality, the peg to the dollar broke down, causing significant losses to many investors. In response, the prosecution pointed out the fact that the investment company entered into contracts to secretly buy Terra to artificially inflate its price, applying charges of conspiracy to manipulate the market.