Terraform Labs co-founder Do Kwon pleaded guilty in Manhattan federal court to one count each of conspiracy to defraud and wire fraud, admitting he misled investors about the stability of the TerraUSD algorithmic stablecoin and its sister token Luna. The two cryptocurrencies collapsed in 2022, erasing roughly $40 billion in market value. Under a plea agreement with the U.S. Attorney’s Office, prosecutors will advocate for a prison term of no more than 12 years—well below the 25-year statutory maximum—provided Kwon commits no new offenses. He also agreed to forfeit about $19 million and to cooperate with restitution efforts. U.S. District Judge Paul Engelmayer scheduled sentencing for Dec. 11. Prosecutors said Kwon secretly arranged for a high-frequency trading firm to support TerraUSD’s peg after it slipped below $1 in 2021, while publicly claiming an autonomous algorithm had restored the price. Those statements, they alleged, lured retail and institutional investors and boosted Luna’s market capitalisation to roughly $50 billion before the system unraveled. Kwon, who was extradited from Montenegro late last year, has been in U.S. custody since January. He still faces criminal proceedings in South Korea. The plea follows an $80 million civil fine and a $4.55 billion settlement with the U.S. Securities and Exchange Commission in 2024, as regulators intensify scrutiny of the cryptocurrency sector.