1 Million Victims Noted by U.S. Authorities

US prosecutors estimate that Terraform Labs co-founder Do Kwon could potentially have a million victims worldwide following the collapse of the Terra ecosystem.

This plea was filed in a New York City court on January 6, 2025; where Kwon was facing nine felony counts related to fraud at Terraform Labs.

In the document submitted by acting U.S. attorney Daniel Gitner, the government outlined its intention to inform victims of their rights under the Justice for All Act of 2004. Due to the sheer scale and global scope of the Terraform Lab shutdown, traditional methods of notifying victims were put in place. It is believed to be impractical. Instead, the government proposed setting up a public website for Kwon’s case proceedings.

The application stated the following:

“Although it is difficult to determine the exact number of Kwon’s victims in light of the multitude of purchases and sales of Terraform’s cryptocurrencies and the manner of these transactions (many transactions in these assets occurred on foreign exchanges and through a digital asset wallet or crypto 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, potentially totaling more than one million.

The Justice for All Act ensures that the victim of a federal crime enjoys certain rights, such as timely notice of public court proceedings, the opportunity to be heard during sentencing or plea agreements, and the right to compensation, if any. However, the Act allows courts to act in cases where a large number of victims must be taken into account; Reasonable procedures are clear in this case.

Do Kwon has long had legal troubles since the collapse of the Terra ecosystem in 2022, which wiped out billions of dollars in investors’ funds and contributed significantly to the broader decline of the cryptocurrency market. Kwon was extradited to the United States in December 2024 after lengthy negotiations involving multiple jurisdictions, including South Korea, following his arrest on unrelated charges in Montenegro in 2023.

On January 2, 2025, Kwon appeared before a US court for the first time and pleaded not guilty to the charges against him. He is still detained. Kwon and Terraform Labs were accused of fraud in a civil lawsuit by the Securities and Exchange Commission in April 2024. In that case, he and Terraform Labs were ordered to pay approximately $4.5 billion in damages, fines, and prejudgment interest.

As the case progresses, the government’s victim information website is expected to play a key role in ensuring compliance with the victim’s legal rights without overburdening the court process. For victims, this represents a real step towards transparency and acknowledgment of the harm suffered as a result of the collapse of Terraform Labs.