Do Kwon admits to two core charges and may face 25 years in prison.

After enduring three years of legal disputes, Do Kwon, co-founder of the defunct blockchain company Terraform Labs, pleaded guilty to fraud charges in a New York court hearing on Tuesday.

This South Korean entrepreneur, who once led the development of the TerraUSD #稳定币 和 # Luna token, is facing multiple serious charges due to an incident in 2022 that resulted in a $40 billion market value evaporation.

According to court documents, Do Kwon initially pleaded not guilty to nine counts, including securities fraud, wire fraud, commodities fraud, and conspiracy to commit money laundering. However, after reaching an agreement with the Manhattan U.S. Attorney's Office, he ultimately admitted to two core charges: conspiracy to commit fraud and wire fraud.

The prosecution accused him of misleading investors through false statements, particularly when TerraUSD first depegged in May 2021, as Do Kwon claimed that the algorithmic protocol would automatically restore the peg, while concealing the fact that he had secretly entrusted a high-frequency trading company to intervene in the market.

In court statements, Do Kwon openly admitted to providing false and misleading statements regarding the previous attempts to restore the peg mechanism. He also acknowledged that failing to disclose the role played by the trading company in the incident constituted a significant negligence.

This artificial manipulation directly led to the market value of the Luna token, which was pegged to TerraUSD, soaring to 50 billion dollars at the beginning of 2022, ultimately triggering the collapse of the entire ecosystem.

As part of the settlement agreement with the SEC, Do Kwon will not only have to pay a $80 million civil penalty but will also be permanently banned from engaging in cryptocurrency trading. This penalty is also part of the $4.55 billion settlement agreement he reached with the SEC.

It is worth noting that this former "crypto golden boy" has been in custody since being extradited from Montenegro to the United States last year, and he is currently facing charges of commodity fraud, securities fraud, and more from the South Korean authorities.

Although Do Kwon may face a maximum prison sentence of 25 years, the prosecution stated that if he fully accepts responsibility, it will recommend a sentence of no more than 12 years in prison, with the final verdict to be announced on December 11.

This case has become an important bellwether for regulatory compliance in the cryptocurrency industry, warning project parties to maintain sufficient transparency towards investors. At the same time, as the trial approaches, global regulators are expected to tighten their scrutiny of stablecoins and algorithmic financial products.