Do Kwon pleaded guilty yesterday! The conclusion of the $40 billion crash case, revealing the final testimony of the king of encryption.

Written by: Oliver, Mars Finance

On August 12, 2025, Eastern Time, New York Manhattan Federal Court - one of the most infamous chapters in cryptocurrency history has finally reached a decisive conclusion. After more than two years of global pursuit and judicial battles, Terraform Labs (TFL) founder Do Kwon (, a man once revered by countless believers as the "King of Crypto," stood before the judge, gave up all defenses, and admitted to multiple criminal charges, including telecommunications fraud and conspiracy to commit fraud.

"What I did was wrong," he said in a calm but clear tone, addressing the court, the prosecutor, the United States Securities and Exchange Commission ) SEC (, and the millions of victims around the world who lost everything because of him, delivering this long-overdue confession.

This statement not only marks a legal conclusion to a financial storm that swept the globe and evaporated over $40 billion in market value, but it also serves as a key to unlock the long-standing biggest question from the outside world: was this collapse an uncontrolled experiment or a premeditated scam? Kwon Do-hyung's final statement personally provided the answer to the latter.

The core of the confession: the concealed "original sin"

The testimony in court went straight to the point. Kwon Do-hyung personally admitted that the core of his fraudulent behavior was not the collapse that ultimately destroyed everything, but rather an earlier, deadly lie that he had meticulously covered up: in May 2021, when the UST stablecoin first faced a de-pegging crisis, he concealed the truth from the world that the algorithm had already failed.

At that time, his proud algorithmic stablecoin UST had experienced a smaller-scale depeg crisis. According to his public promotion, this "perpetual motion machine" made of code was supposed to "self-repair." But the reality is, the algorithm failed.

Qian Daoheng admitted in his confession that he did not rely on algorithms, but secretly contacted a top crypto market maker with a Wall Street background—Jump Trading. The two parties reached a secret agreement, whereby Jump spent tens of millions of dollars to forcibly buy UST on the open market, artificially bringing the price back to $1. Afterwards, Qian Daoheng not only failed to disclose the truth but instead packaged this "rescue" as a perfect proof of the power of the algorithm, and based on this, attracted subsequent investments totaling hundreds of billions of dollars.

"I made false and misleading statements to investors regarding the stability of its (UST), without disclosing the role of a trading company in restoring its peg." This statement in court was the last fig leaf he personally tore away. It was this lie, which he referred to as the "original sin," that caused Terra to slide from what might have been a flawed innovative project into the abyss of fraud.

The Kingdom Above Lies and the Arrogant "King"

With this secret weapon, Kwon Do-hyung's courage grew bolder. He launched a lending platform that can be called a "perpetual wealth machine"—Anchor Protocol, which offers users depositing UST an "almost risk-free" annual yield of nearly 20%. Under the grand narrative of "crypto fundamentalism" and the temptation of ultra-high returns, global investors flocked in.

The surge in demand has driven the issuance of UST to rise steadily, and according to its algorithmic mechanism, the minting of UST requires the destruction of its sister token LUNA. This has directly led to the price of LUNA skyrocketing, reaching as high as $119 at the beginning of 2022, making it one of the top five by market capitalization globally.

At this time, Quan Dao Heng has already become a top "internet celebrity" and "king" in the crypto world. He began to display extreme arrogance on social media, responding to all skeptics with disdain and ridicule. When an economist pointed out the risks of his model, he replied, "I never debate with the poor." When someone predicted that his project would collapse, he even publicly bet millions of dollars. He once arrogantly claimed, "95% of coins will die, but it's also interesting to watch them die."

Looking back now, this invincible arrogance is built on the lie that he could forever manipulate the market. He seems convinced that he is capable of defying all economic laws.

The End: 72 Hours of Ashes and Smoke

A building built on lies will ultimately collapse.

On May 8, 2022, the weekend that would later be known as "The Night of the Lunar Eclipse," when one or more "whale" accounts initiated precise sell-offs using UST during a liquidity window at decentralized exchanges, the dominoes began to fall.

Panic spread in an instant, and the price of UST began to deviate from 1 dollar. This time, there was no secret white knight to come to the rescue. The algorithm, once revered as a classic, revealed its grim side in the face of massive sell pressure - the "death spiral." In order to drive up the price of UST, the algorithm began to mint LUNA at an alarming rate, with the supply of LUNA in the market soaring from hundreds of millions to an astonishing 6.5 trillion in just a few days. The massive issuance caused the price of LUNA to plummet to zero, and UST was not spared either.

A billion-dollar empire crumbled within 72 hours.

Escape, Trial, and the Final Cost

After the collapse, Kwon Do-hyung began a ten-month global escape. He first claimed he would "rebuild" Terra, and then vanished without a trace. The South Korean prosecution quickly issued an arrest warrant, and Interpol subsequently issued a highest-level red notice.

Until March 2023, he was arrested while attempting to board a plane in Montenegro using a forged passport. Subsequently, a judicial drama unfolded regarding whether he would be extradited to the United States or South Korea. Ultimately, under the deterrent of harsher penalties in the United States and the strong outcry of the victims, he was put on a plane to New York on December 31, 2024.

In the United States, he not only has to face a staggering $4.5 billion civil settlement fine imposed by the SEC (this fine will be paid through the liquidation of his bankrupt company TFL), but he also has to confront criminal charges that will ultimately force him to submit.

The guilty plea of Kwon Do-hyung has put an end to this protracted accountability. The "Terra 2.0" revival plan he created has long since degenerated into a "ghost chain" with on-chain data of less than a million dollars. His downfall has also completely changed the landscape of the cryptocurrency industry. The European Union's "Regulation on Markets in Crypto-Assets" )MiCA( and other global regulatory frameworks, by mandating that stablecoins must hold sufficient reserves, have effectively sentenced the algorithmic stablecoin model like Terra to death.

From a Stanford genius to an industry leader, then to a globally wanted fugitive, and finally becoming a convicted prisoner in court, bowing his head in confession. Kwon Do-hyung's final testimony is not only the end of his personal fate but also a wake-up call for the conclusion of an era of high leverage, unregulated, and driven by fervent narratives in the world of cryptocurrency.