On August 11 (local time), Bloomberg and other outlets reported that Do Kwon, founder of Terraform Labs, who is currently facing criminal trial in the United States on nine charges including fraud related to the issuance of the stablecoin TerraUSD, appears poised to change his stance and plead guilty.

On this day, Judge Paul Engelmayer of the U.S. District Court for the Southern District of New York announced that he had been notified that Kwon may change his plea. He stated that an emergency hearing would be held in court on the morning of the 12th.

Kwon Dohyung, CEO of Terraform Labs, heading to Podgorica District Court in Podgorica, the capital of Montenegro, in 2023. Photo by Yonhap News

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The U.S. Attorney's Office for the Southern District of New York indicted Kwon on eight charges-including securities fraud, wire fraud, commodities fraud, and conspiracy to manipulate the market-shortly after his arrest in Montenegro in March 2023. After securing his extradition from Montenegro at the end of last year, an additional charge of conspiracy to commit money laundering was added. If convicted on all nine charges, Kwon faces up to 130 years in prison. In early January of this year, Kwon appeared at an arraignment hearing and pleaded not guilty to all charges.

If Kwon accepts a plea bargain-pleading guilty in exchange for a reduced or adjusted sentence-and the judge approves it, the trial process for those charges will conclude and move directly to sentencing.

Initially, the trial was expected to begin in February next year, with a verdict likely only after that, due to the vast amount of evidence to be analyzed and translated. However, Kwon’s sudden change of stance has fueled speculation that he may be seeking a presidential pardon. Some in the cryptocurrency industry predict that Kwon could request a pardon from President Donald Trump, who is known for his pro-cryptocurrency policies.

Recently, U.S. government agencies have shown a friendlier attitude toward the cryptocurrency industry. The U.S. Securities and Exchange Commission (SEC), which had been engaged in a legal dispute with Ripple Labs-the issuer of the cryptocurrency Ripple (XRP)-for alleged violations of securities laws, recently changed its position and dropped the lawsuit.

The prosecution leadership was also replaced by personnel from the Trump administration.

Jay Clayton, who served as the chairman of the Securities and Exchange Commission during the first Trump administration, was appointed as the U.S. Attorney for the Southern District of New York. He is known for his pro-cryptocurrency stance.

A federal prosecutor who played a key role in the Kwon case also left the prosecution.

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The passage of the 'Genius Act' in the U.S. Congress last month has also created a more favorable environment for Kwon. During a pretrial conference in June, Judge Engelmayer asked Kwon’s legal team whether the then-pending Genius Act in Congress would affect the trial, to which the defense replied, "Of course, it will have an impact."