Do Kwon may flip to guilty plea in case connected to $40 billion UST collapse

Terraform Labs co-founder Do Kwon may be planning a switch to a guilty plea in the Department of Justice's (DOJ) case against him, according to a court schedule order filed by Judge Paul Engelmayer on Monday.

Do Kwon could plead guilty in court to criminal charges

Terraform Labs co-founder Do Kwon could be set to switch to a guilty plea a few months after pleading not guilty, court filing shows.

"The court has been advised that the defendant may enter a change of plea," an order filed by Judge Engelmayer on Monday in the US District Court for the Southern District of New York (SDNY) stated.

Judge Engelmayer ordered that Kwon prepare to deliver a detailed statement in court, addressing each charge he plans to admit and urged his lawyers to prepare it in advance.

"...the defendant should be prepared to give a narrative allocution that incorporates all elements of the offense(s) to which the defendant is pleading guilty."

Kwon is expected to appear in court for a Tuesday conference to air his potential new position.

The Terraform's co-founder pleaded not guilty in January to several charges including conspiracy to defraud, commodities and securities fraud, wire fraud, market manipulation, and conspiracy to commit money laundering.

The charges stem from Kwon’s alleged contribution to the TerraUSD (UST) algorithmic stablecoin collapse in May 2022, which went on to wipe the token's entire market cap of about $40 billion. UST failed following a flaw in its mint-and-burn mechanism with the LUNA token.

Terraform Labs collapsed alongside UST in 2022, a key event that spiralled into the crash of several other crypto platforms including the FTX crypto exchange.

Do Kwon’s location was unknown for months after UST’s collapse before his arrest in Montenegro for attempting to travel using fake documents. He was eventually extradited to the US despite his legal team’s effort to stop the action in Montenegro courts.