Do Kwon’s Legal Saga Continues: South Korea Prepares Second Trial

Do Kwon, the embattled founder of Terraform Labs, faces another legal reckoning. South Korean prosecutors are reportedly moving forward with a second trial, signaling that the fallout from the Terra-LUNA collapse is far from over.

The Legal Labyrinth

This isn't Kwon's first courtroom rodeo. The new proceedings add another layer to a complex international legal battle. Authorities are likely sharpening their arguments, building on previous charges related to the multi-billion dollar ecosystem crash.

Why It Matters for Crypto

Beyond the headlines, this case is a benchmark for regulatory enforcement. Every subpoena and court date sends a message to the industry about accountability. It's a stark reminder that the 'move fast and break things' ethos has real-world consequences—and sometimes, a prosecutor's office waiting at the finish line.

The market watches, often with a cynical eye, as another crypto titan navigates the justice system. For some investors, it's a sobering lesson in due diligence; for others, just another Tuesday in the volatile world of digital assets.

The case against Do Kwon 

Do Kwon, a South Korean national and co-founder of Terraform Labs, was sentenced in the U.S. after pleading guilty to fraud and money laundering tied to one of crypto’s largest collapses. Following the collapse of TerraUSD in 2022, South Korean prosecutors issued an arrest warrant for Kwon, while U.S. agencies launched parallel investigations. 

The investigations uncovered evidence that Terraform Labs had secretly relied on external firms to prop up Terra’s price, contradicting public claims that the UST stablecoin’s algorithm alone restored its peg. By early 2023, the case had gone global, with Kwon arrested in Montenegro while attempting to travel using fake documents.

By mid-2025, pressure mounted in the U.S. case. Prosecutors accused Kwon of orchestrating a scheme built on misleading statements to investors, while regulators tied the Terra crash to a broader chain reaction that later engulfed firms like FTX.

In August, reports emerged that Kwon was considering a guilty plea. Markets reacted immediately, with Terra-linked tokens falling again. While his defense argued that ongoing Korean investigations should limit U.S. punishment, the court rejected that reasoning at the time.

As Kwon’s case drags on, South Korea is also battling a rise in crypto-related crime. This week, cybersecurity firms warned that North Korean hackers are using fake Zoom and Teams meetings to steal crypto and sensitive data, targeting professionals through social engineering. 

Also read: South Korea Closes Regulatory Gaps After Upbit Breach