Do Kwon’s Fraud Victims Estimated at Over One Million Worldwide
US Prosecutors estimate over one million investors lost approximately $40 billion in the Terra-LUNA collapse, per court documents filed in the criminal case against Terraform Labs co-founder Do Kwon. The May 2022 failure of the Terra ecosystem ranks among the largest financial losses in cryptocurrency history, destabilizing 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, detailing steps to inform victims about their rights. Given the number of impacted individuals and entities, the government plans to create a dedicated website for public proceedings, as other methods are impractical.
Gitner noted difficulties in quantifying victims due to transactions often conducted on foreign exchanges or through crypto wallets without identifiable information. Authorities estimate that hundreds of thousands could be 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 appeared before 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 related to Terraform and agreed to remain in detention. His extradition concluded a legal saga across multiple countries.
Kwon was apprehended in March 2023 while attempting to board a flight to Dubai with a forged passport. After serving four months for document fraud, Montenegro approved his extradition to the US in December 2024, resolving a dispute with South Korea, where he also faces charges.
The Terra collapse triggered significant turmoil in the crypto market. TerraUSD, an algorithmic stablecoin, crashed, eroding trust and leading to substantial investment losses. Major cryptocurrencies such as Bitcoin and Ethereum experienced severe declines, and some firms ceased operations 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. This case, linked to Terraform's bankruptcy, demonstrated how the ecosystem's collapse contributed to broader financial chaos, including FTX’s downfall.
Do Kwon faces crucial legal challenges as he confronts multiple criminal charges in the United States. A pretrial conference scheduled for January 8, 2025, marks the start of what prosecutors describe as a landmark cryptocurrency fraud case. They allege that Kwon misled investors about the stability of TerraUSD (UST), the core stablecoin of the Terra ecosystem.
The collapse particularly impacted the project’s most devoted supporters, known as “Lunatics,” many of whom invested significant portions of their savings based on Kwon’s public assurances regarding the protocol’s reliability.