Do Kwon's Criminal Trial Pushed to 2026

Do Kwon, co-founder and former CEO of Terraform Labs, is scheduled to face his criminal fraud trial in the United States on 26 January 2026.

Set in New York, the trial will be overseen by Judge Paul Engelmayer and is expected to last between four to eight weeks.

Kwon has yet to engage extensively with his attorney regarding the trial date but has one week to request a rescheduling for an earlier hearing.

Endless Evidence for Prosecutors to Comb Through

Judge Engelmayer, in a Manhattan courtroom on Wednesday, acknowledged that he had never overseen a case with such a prolonged gap between arraignment and trial.

However, he noted that Kwon's case, with its vast and complex evidence, warranted this delay.

Prosecutors and defense attorneys are faced with the monumental task of reviewing six terabytes of data, including emails, Slack communications, trading records, and video statements.

Additionally, some of the evidence consists of recordings made without Kwon's knowledge, potentially raising procedural concerns.

The delay is also driven by challenges in accessing four encrypted cell phones seized from Montenegrin authorities during Kwon's extradition, which are critical to the prosecution's case.

These phones, suspected of containing key financial records and communications related to the alleged crypto fraud, remain largely inaccessible due to encryption.

Furthermore, the translation of crucial data from Korean to English has contributed to the lengthy preparation process.

Prosecutors to Search Kwon's Twitter & Email

Prosecutors in the US criminal case against Kwon have outlined their discovery strategy, revealing plans to obtain search warrants for the Terraform Labs co-founder's email and Twitter accounts.

In a 7 January filing with the US District Court for the Southern District of New York, the chief counsel for the acting US Attorney stated that the prosecution anticipated uncovering "multiple terabytes of data" crucial to their case.

The discovery process will involve searching accounts and devices linked to Kwon, including his business and personal emails, his Twitter account, and four electronic devices.

Notably, Kwon remained active on Twitter (now known as X) during the 2022 collapse of the Terra ecosystem, with his final post made just before his arrest in Montenegro in 2023.

Prosecutors also plan to review trading records and materials from cryptocurrency exchanges as part of their investigation.

Two Opposing Parties Go at it in Court

Kwon, dressed in a bright yellow jumpsuit, was accused of masterminding "a massive, highly sophisticated fraud," as outlined by prosecutor Lenow during Wednesday's hearing.

Lenow argued that Kwon was not merely promoting a cryptocurrency, but a complex "utopian system" that included a stablecoin, a savings bank, and a payment network supposedly controlled by its users.

However, the prosecutor emphasized that these "core systems" failed to operate as promised.

Behind the scenes, Kwon allegedly intervened in the self-regulating ecosystem to "create the illusion" of functionality.

In contrast, Kwon's defense, led by attorney Michael Ferrara, contends that Terraform Labs' products were legitimate and performed as described until market conditions shifted.

Ferrara argued that TerraUSD's stability was contingent on demand, which collapsed during a market panic.

He added:

“As long as people wanted it, it would be stable.”

The defense also plans to challenge the admissibility of evidence gathered through international cooperation and search warrants, including materials seized by Montenegrin authorities.

Ferrara hinted that legal disputes could arise, particularly regarding the phones seized by Montenegrin officials—evidence that may be contested due to questions over the legitimacy of the warrants involved.

Kwon's Could Face Harsher Judgement Than SBF's 25-Year Jail Term

Kwon recently pleaded "not guilty" to a nine-count indictment, facing charges that include securities fraud, wire fraud, commodities fraud, and conspiracy to launder money.

These charges stem from the catastrophic $40 billion collapse of the Terra/LUNA ecosystem in 2022.

Zack Guzmán, a journalist who previously interviewed Kwon, wrote:

“Terra Founder Do Kwon is now facing a maximum penalty of 130 years in prison. The criminal charges detailed in the DOJ's 79-page indictment include new allegations that were not part of the SEC's civil trial. The reason why this case is more interesting than the SBF/FTX case is because it more directly applies to crypto projects and founders experimenting in DeFi.”

Kwon's extradition from Montenegro was completed on New Year's Eve following approval by Justice Minister Bojan Bozovic, who determined that US jurisdiction was more appropriate than South Korea's based on legal considerations.

Kwon’s upcoming trial is expected to mirror the high-profile case of FTX founder Sam Bankman-Fried (SBF), though the allegations against Kwon are more serious, with a significantly higher number of victims.

While SBF is currently serving a 25-year sentence, Kwon could face an even harsher penalty if convicted.

After months evading authorities and ultimately being arrested in Montenegro on unrelated charges, Kwon now faces US prosecutors prepared to prosecute one of the most significant fraud cases in cryptocurrency history.

Next Pretrial Conference Set for 6 March to Review Progress

The court has set the next status conference for 6 March 2025, at 11 am Eastern Time, with updates due by 27 February.

During this session, the court will assess the progress of the discovery process and consider any adjustments to the trial timeline.

Both the prosecution and defense will report on their analysis of the crypto fraud evidence.

Judge Engelmayer has encouraged plea discussions, but both sides expect the case to move forward to trial.

Kwon remains in custody at a facility in Essex County, New Jersey.