On August 12, 2025, the Crypto Assets industry witnessed a shocking legal milestone. Do Kwon, the founder of Terraform Labs, admitted to multiple serious charges in a federal court in Manhattan, New York, including conspiracy to commit commodity fraud, securities fraud, and wire fraud. This plea marks a new judicial phase in the collapse of TerraUSD (UST) and Luna (LUNC) in 2022, which shocked the global Crypto Assets market.

The extent of the impact of this event is considered one of the most destructive collapses in the history of Crypto Assets, resulting in approximately $40 billion in losses for global investors and triggering a chain reaction throughout the entire Crypto Assets market. The guilty plea of Kwon Do-hyung is not only an admission of personal wrongdoing but also a warning to the entire industry.

According to court information, Kwon Do-hyung faces a maximum of 25 years in prison, with the prosecution recommending a sentence of 12 years. In addition, he has agreed to pay a fine of over $19 million and to waive any rights to profits from Terraform Labs and its related Crypto Assets. The final ruling will be announced on December 11, 2025.

The development of this case has had a profound impact on the Crypto Assets industry. On the regulatory level, it has become an important sign of strict regulation by law enforcement agencies on the Crypto Assets industry, particularly strengthening global scrutiny of algorithmic stablecoins. On the market level, this event has further deepened investors' awareness of the inherent risks of Crypto Assets, while also推动了整个行业向更规范化、合法化的方向发展.

From a legal perspective, the case of Quan Dao Heng provides important judicial reference for similar cryptocurrency fraud cases in the future, clarifying the legal characterization of certain behaviors. This will undoubtedly have a profound impact on the future development direction of the entire industry.

It is worth noting that Kwon Do-hyung's legal troubles did not start with this guilty plea. As early as March 2023, he was arrested in Montenegro for using a forged passport and was extradited to the United States in December 2024. Previously, he also reached a civil settlement with the U.S. Securities and Exchange Commission (SEC), paying an $80 million fine and being banned from engaging in crypto assets trading activities.

With Terraform Labs filing for bankruptcy protection, its remaining assets will be used to compensate victims, bringing a glimmer of hope to investors who suffered losses in the collapse. However, given the vast scale of the losses, fully compensating all investors still seems like an unattainable goal.

The development of this series of events will undoubtedly become an important turning point in the history of Crypto Assets, driving the entire industry towards a more transparent and responsible direction. At the same time, it also reminds investors to remain cautious and vigilant when entering the high-risk Crypto Assets market.