US prosecutors estimate that Do Kwon, co-founder of Terraform Labs, could have a million victims worldwide after the collapse of the Terra ecosystem.
This claim was made before a New York court on January 6, 2025, where Kwon is facing nine counts of felony fraud related to Terraform Labs.
In the document has been submitted by a practicing US attorney Daniel Gitnerthe government outlined its intention to inform victims of their rights under the Justice for All Act of 2004. Due to the size and scale of Terraform Lab's spread around the world, it was a perception that traditional methods of contacting victims were lacking. Instead, the government proposed setting up a public website for Kwon's case proceedings.
The filing said:
“Although it is difficult to accurately estimate the number of Kwon's victims due to the large number of purchases and sales of Terraform cryptocurrencies and how these transactions were conducted (with many transactions in these funds occurring on foreign exchanges and through a digital or crypto asset wallet. trading accounts without personal identification information), the Government estimates that the number of victims, in this case, exceeds hundreds of thousands of individuals and organizations, and there are probably more than a million.”
The Justice for All Act provides that a victim of a federal crime has certain rights such as timely notice of public court proceedings, the opportunity to be heard during sentencing or plea agreements, and the right compensation if applicable. The Act, however, gives room to the courts to apply cases where a large number of victims must be considered; reasonable procedures are evident in this case.
Do Kwon has long had legal problems since the collapse of the Terra ecosystem 2022which wiped out billions of dollars in investors' money and contributed significantly to a broader downturn in the cryptocurrency market. Kwon was extradited to the US in December 2024 after lengthy negotiations involving many jurisdictions, including South Korea, following his arrest in Montenegro in 2023 for unrelated costs.
On January 2, 2025, Kwon appeared before a US court for the first time and entered a court plea of not guilty to the charges against him. He is still being held in custody. Kwon and Terraform Labs were also charged with fraud by the Securities and Exchange Commission in a civil case in April 2024. In this case, he and Terraform Labs were ordered to pay nearly $4.5 billion in damages , civil penalties, and prejudgment interest.
Moving forward, the government's victim notification website is expected to play an important role in ensuring that a victim's statutory rights are upheld without overburdening them. on court processes. For victims, this represents a real step towards transparency and recognition of the harms suffered as a result of the Terraform Labs collapse.
