Crypto X is split into Do Kwon’s guilty plea

Do Kwon’s fall from Crypto Wunderkind to Fraudster has recently reached its final act. The co-founder of Terraform Labs, once praised for being visionary, pleaded guilty to charges related to Terrausd and Luna’s $40 billion collapse. As one of the most devastating financial collapses in the history of code, his entry has prompted a new wave of responses across the community.

Following Do Kwon’s guilty plea and entry into the charges, including conspiracy to commit fraud, several industry members took him to social media to express his relief, anger and a sense of proof.

Community responds to making Kwon’s guilty plea

In X, user Rui writes: “It’s good to see justice done in the $400 billion crypto crash,” repeats Kwon’s illicit scheme. Another commenter, Bubble, declared that “justice will finally win,” and Fat Man Terra, a well-known Terra critic, described the moment as “a after years of work.”

The discussion quickly became a potential sentence for Kwon. The dishonest code mogul faces up to 25 years in prison, but his guilty pleas could see the possibility that it had dipped to around 12 years and angered many. User Radstaker claimed that “Kwon belongs to prison for a minimum of 25 years”, but Fatmanterra added that 15-20 years is plausible.

But according to others, both potential 12 and 25 years are too generous. One commenter said, “I hope Kwon goes to prison and they throw away the keys. That’s the smallest justice he should face.”

In his rage, others opposed. One commenter argued that Kwon was not criminally liable for the May 2022 collapse and claimed that the blockchain was “attacked and broken” rather than mismanaged. “He may have been a mistake, but he is not a criminal,” they wrote.

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Another added, “There were no crimes. The entire mechanism was exposed in smart contracts. He did not conspire to commit wire fraud.”

How did Terra collapse happen?

The Terra Ecosystem collapsed in May 2022 after Stablecoin UST lost PEG to US dollars, causing a $40 billion wipeout. Unlike reserved back stubcoins, UST relied on mint and burning mechanisms with sister token Luna to maintain its value.

The crack began when a large withdrawal from Anchor Protocol, a lending platform that provides 20% yield in UST sediments, puts massive sales pressure on Stablecoin. UST fell from $1 to $0.98 before falling, then fell, falling, causing panic among traders who abandoned their holdings and deepened their DEPEG.

Terraform Labs tried to fix the PEG by casting large quantities of Luna, which flooded the market and caused Luna’s price to collapse from over $80 to fractions. Even after rolling out $3 billion in Bitcoin (BTC) reserves to recover UST’s PEG, the spiral could not be stopped.

The fallout marked one of the biggest failures in the history of the code, leaving millions of investors at great losses. Do Kwon was arrested in Montenegro in March 2023 after running for several months. His final extradition to the US occurred in late 2024, and now led to his latest plea.

But for many, the real question is not about Kwon’s sentence or innocence, but whether his plea will lead to meaningful compensation for the victim.

What does Kwon’s guilty admission mean to creditors?

Many community members have updated requests for refunds for lost funds. Kwon’s guilty plea includes the confiscation of a $19 million penalty, with some people wondering whether the funds would take to resolve the victims of the crash.

So far, there is no clear answer. Terraform Labs’ refund efforts have been largely silent in recent months, with the final major update announced on May 14, 2025 when it announced the deadline for the billing portal via X.

TerraformLabs filed for Chapter 11 bankruptcy in January 2024. This was approved by the Delaware Bankruptcy Court in September of the same year.

Creditors remain in scope until details appear. Meanwhile, guilty pleas have yet to have a major impact on prices. Terra Luna has only increased by 6%, while Terra Luna Classic (LUNC) has only increased by 4% over the past 24 hours.

read more: Terraform Labs has launched a billing portal to begin reimbursing creditors