Coinspeaker Do Kwon’s Fraud Victims Exceed One Million: Court Filing
US Prosecutors have estimated that more than one million investors worldwide lost approximately $40 billion in the collapse of Terra-LUNA, according to court documents filed in the criminal case against Terraform Labs co-founder Do Kwon. The May 2022 implosion of the Terra ecosystem ranks among the largest financial losses in cryptocurrency history, triggering a domino effect that destabilized the entire digital asset market.
On January 6, Acting US Attorney Daniel Gitner filed a notification in the US District Court for the Southern District of New York, outlining steps to inform victims about their rights. Given the vast number of impacted individuals and entities, the government plans to launch a dedicated website for public proceedings, considering other methods impractical.
Gitner explained the difficulties of quantifying victims due to the nature of transactions, often conducted on foreign exchanges or through crypto wallets lacking identifiable information. Still, authorities estimate hundreds of thousands of individuals and entities could be among those affected.
“While it is difficult to precisely quantify the number of Kwon’s victims […] the Government estimates that the number of victims […] exceeds hundreds of thousands […] and potentially totals more than one million,” said Gitner
Kwon’s Extradition Saga Ends — He Pleaded Not Guilty
Do Kwon faced a New York judge for the first time on January 2, following his extradition from Montenegro. He pleaded not guilty to nine felony fraud charges tied to Terraform and agreed to remain in detention. His extradition marked the culmination of a legal saga spanning multiple countries.
Montenegrin authorities apprehended Kwon in March 2023 when he attempted to board a flight to Dubai with a forged passport. After a four-month prison sentence for document fraud, Montenegro approved his extradition to the US in December 2024, ending a tug-of-war with South Korea, where Kwon also faces charges.
The Terra collapse in 2022 triggered a domino effect in the crypto market. TerraUSD, pegged to maintain its value against the US dollar, crashed spectacularly, eroding trust and wiping out significant investments. Major crypto assets like Bitcoin and Ethereum suffered severe losses, while some firms vanished entirely.
Critical Pretrial Conference Set for Jan. 8
While detained in Montenegro, a New York jury found Kwon and Terraform liable in a $4.47 billion civil fraud suit filed by the SEC. The case, later tied to Terraform’s bankruptcy, highlighted how the ecosystem’s implosion fueled broader financial chaos, including FTX’s collapse.
Do Kwon faces a pivotal moment in his legal battle as he confronts multiple criminal charges in the United States. A crucial pretrial conference scheduled for January 8, 2025, marks the beginning of what prosecutors describe as a landmark cryptocurrency fraud case. Prosecutors allege that Kwon deliberately misled investors about the stability of TerraUSD (UST), the algorithmic stablecoin at the heart of the Terra ecosystem.
The collapse particularly devastated the project’s most devoted supporters, known in the crypto community as “Lunatics,” many of whom had invested significant portions of their savings based on Kwon’s public assurances about the protocol’s reliability.
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Do Kwon’s Fraud Victims Exceed One Million: Court Filing
