US Prosecutors Estimate Over 1 Million Victims in Do Kwon Crypto Fraud Case

U.S. prosecutors pursuing criminal charges against Terraform Labs co-founder Do Kwon have estimated that the collapse of the TerraUSD and Luna cryptocurrencies may have affected more than one million individuals and entities.

The estimate was revealed in a filing submitted on January 6 by acting U.S. Attorney Daniel Gitner to the U.S. District Court for the Southern District of New York.

Over 1 Million People Affected

Gitner admitted that accurately determining the number of individuals affected by Kwon’s actions is challenging due to the large amount of purchases and sales of Terraform’s cryptocurrencies and the nature of those transactions. However, he also said:

“The Government estimates that the number of victims in this case exceeds hundreds of thousands of individuals and entities, and potentially totals more than one million.”

The document outlined the measures proposed under the Justice for All Act of 2004 to inform victims of their rights. Given the impracticality of sending individualized notices to every affected person, the government has suggested creating a public website to keep victims updated on case proceedings.

Prosecutors allege that Kwon misled investors by promoting his organization as a decentralized financial ecosystem featuring innovative technologies like its own currency, payment system, stock market, and savings bank.

According to the indictment, he falsely claimed that the Terra ecosystem operated autonomously through blockchain technology and user governance, hiding his and his team’s control.

The filing states that Kwon’s system was built on “lies” and “manipulative and deceptive” techniques, ultimately leading to investor losses exceeding $40 billion when the TerraUSD and Luna cryptocurrencies collapsed in May 2022.

Legal Troubles

Following the crash, Kwon became a fugitive, evading authorities until his capture in Montenegro in 2023 on unrelated charges. Both South Korea and the U.S. sought his extradition, leading to prolonged legal battles. The co-founder was ultimately sent to the latter in December 2024

The 33-year-old now faces multiple criminal charges in the United States, including commodities fraud, securities fraud, wire fraud, and conspiracy to commit money laundering. In addition, the Securities and Exchange Commission (SEC) brought a civil fraud case against him and Terraform Labs in April 2024, resulting in a $4.5 billion settlement.

On January 2, 2025, he appeared in a U.S. court for the first time and pleaded not guilty to the criminal charges. He remains in custody, with his next court hearing scheduled for January 8.