Do Kwon, the founder of Terra/Luna, entered a guilty plea on Tuesday for one count of conspiracy to commit fraud and another for wire fraud, marking a significant turn from his previous not guilty stance amid a protracted extradition process.
The Background
As the architect behind the TerraUSD stablecoin and its associated Luna (LUNA) token, Do Kwon has been at the center of one of the most dramatic collapses in the cryptocurrency sector. In 2022, the Terra and Luna ecosystem experienced a catastrophic failure, with Luna’s value plummeting from an all-time peak of nearly $120 to under 10 cents in just five weeks. This collapse also triggered a chain reaction of bankruptcies across various crypto companies throughout the year.
The Details
In 2021, Kwon frequently reassured investors regarding the stability of Terra and Luna through various social media posts and appearances on platforms like CoinDesk TV. However, during his guilty plea on Tuesday, he expressed remorse for his actions. “Between 2018 and 2022 in the Southern District of New York and elsewhere, I knowingly agreed with others to engage in a scheme to defraud, and did in fact defraud, purchasers of the cryptocurrencies issued by my company, Terraform Labs,” he stated, admitting to having made “false and misleading statements” regarding the stability of UST’s peg.
The Implications
As part of his plea agreement, the Department of Justice has indicated it will recommend a sentence of no more than 12 years in prison. Kwon will also be eligible to seek an international prison transfer after serving half of his sentence. It is important to note that Kwon faces additional charges in South Korea, where he sought extradition during his prolonged stay in Montenegro. His statement underscored this issue: “The purchasers who I defrauded were in the Republic of Korea, the Southern District of New York and elsewhere.”
Additional Developments
On the same day, Do Kwon pled guilty to two charges connected to the operation and subsequent downfall of the Terra/Luna stablecoin ecosystem. In a separate legal matter, a three-judge panel of the D.C. Circuit Court of Appeals determined that a lower court lacked the jurisdiction to obstruct the Trump administration’s attempts to downsize the Consumer Financial Protection Bureau (CFPB). The panel noted that the plaintiffs failed to provide any evidence of a regulation or directive aimed at closing the CFPB, leading to a statement from Attorney General Pamela Bondi celebrating the ruling as a victory for her department.
In other news, the White House reportedly dismissed IRS Commissioner Billy Long following conflicts regarding the sharing of confidential taxpayer information. Additionally, states are beginning to respond to concerns that data centers operated by major tech companies could be inflating local electricity costs.
Bloomberg released an analysis on Justin Sun, the founder of Tron, revealing he possesses over 60 billion TRX (approximately $4.9 billion), which constitutes a significant portion of its supply. Sun also has crypto holdings valued at $3.55 billion and an additional $3.73 billion in HTX assets. He sought a temporary restraining order to prevent the publication of this information, despite the page already being accessible, and his team provided wallet addresses to Bloomberg for verification purposes.
The repercussions of the recent hack on the federal court database system PACER continue to unfold. Furthermore, Reuters has published an in-depth examination of Meta’s artificial intelligence policies, revealing concerning practices such as chatbots guiding users to real addresses and conversing with minors inappropriately. Some of these policies were altered after inquiries from Reuters.
A captivating investigative piece has emerged regarding two individuals accused of kidnapping an Italian crypto investor in New York, detailing a bizarre and complex situation.
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See you all next week!
