The end of the century case of the UST collapse! Terra founder Do Kwon confirms guilty plea on August 12, as $40 billion fraud charges are about to be pronounced.

Do Kwon, co-founder of Terraform Labs, will plead guilty to cryptocurrency fraud charges in federal court at 10:30 AM Eastern Time on August 12. This move marks a departure from his previously planned defense strategy for the trial set for January 2026. Earlier, U.S. prosecutors accused him of orchestrating a fraudulent scheme that led to the collapse of LUNA and UST, resulting in a $40 billion loss (equivalent to El Salvador's annual GDP). After nearly a year on the run, Kwon was arrested in Montenegro in March 2023 for using a fake passport and was extradited to U.S. authorities.

Plea Deal Twist: The Century Trial Ends Early

• Court Document Confirmation: According to Inner City Press, presiding judge Paul Engelmayer issued a Docket Order on August 11, confirming Do Kwon's plea process.
• Strategic Major Shift: This plea marks the Kwon team's abandonment of the planned courtroom confrontation set for January 26, 2026.
• Judge Facilitates Settlement: Judge Engelmayer had previously urged both the prosecution and defense to engage in Plea Discussions, ultimately reaching an agreement before the trial.

$40 Billion Fraud Allegations: Aftermath of UST Collapse Unresolved

• Core Accusation by the Prosecution: U.S. federal prosecutors have charged Kwon with orchestrating a crypto fraud scheme that led to the collapse of LUNA and the algorithmic stablecoin UST in May 2022, resulting in losses exceeding $40 billion.
• Historical Industry Disaster: The collapse of the Terra ecosystem triggered a chain reaction in the crypto market, being classified as one of the most severe failures of crypto assets in history.
• "Potemkin Village" definition: Assistant Prosecutor Jared Lenow described the Terraform ecosystem as essentially fraudulent, a "Potemkin Village," accusing its products of requiring continuous market manipulation to maintain value.

Global Manhunt: The Final Extradition of Fake Passports

• Escape Route Shattered: Kwon fled for nearly a year after the UST collapse, and in March 2023, Montenegro police arrested him while he was boarding a flight using a forged Costa Rican passport.
• Extradition Tug-of-War Concludes: Kwon has fought extradition proceedings in Montenegro for several months, ultimately being handed over to U.S. custody.
• Judicial Liquidation Channel: The extradition has cleared the obstacles, allowing the U.S. prosecution to advance the fraud charges that ended in a guilty plea.

Case Historical Positioning: Crypto Regulation Watershed

• Largest Scale Encryption Fraud Case: This case is one of the most iconic Crypto Assets fraud lawsuits handled by U.S. federal authorities.
• Financial Crime Scale Benchmark: A loss of 40 billion USD places it among the largest financial fraud cases in recent years.
• Industry Regulatory Warning Monument: The judgment will become an important precedent for the regulation of algorithmic stablecoins and decentralized finance (DeFi).

Conclusion: The Judicial Final Chapter of the Algorithmic Stablecoin Myth Do Kwon's guilty plea marks the impending judicial conclusion of one of the darkest chapters in crypto history—the $40 billion UST crash. From being the "leader of the algorithmic stablecoin revolution" to a defendant in federal court, his fall serves as a wake-up call for the industry. This case is not only about personal accountability but has also become a touchstone for testing the boundaries of decentralized finance regulation. As details of the plea emerge, the compensation pathways for UST crash victims, the liquidation plans for the remaining assets of the Terra ecosystem, and the evolution of global regulatory stances on algorithmic stablecoins will become the focal points of future attention. The conclusion of this monumental case will inevitably place a heavy period on the era of crypto frenzy.