US prosecutors estimate more than 1 million victims in Do Kwon crypto fraud case

US prosecutors pursuing criminal charges against Terraform Labs co-founder Do Kwon have estimated that the collapse of cryptocurrencies TerraUSD and Luna could have affected more than a million people and entities.

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

More than 1 million people affected

Gitner admitted that accurately determining the number of individuals affected by Kwon’s actions is challenging due to the sheer volume 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 that it potentially amounts to more than a million.”

The document outlined measures proposed under the Justice for All Act 2004 to inform victims of their rights. Given the impracticality of sending individualized notices to each affected person, the government has suggested the creation of 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 with innovative technologies such as its own currency, payment system, stock exchange and savings bank.

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

The filing claims that Kwon’s system was based on “lies” and “manipulative and deceptive” techniques, which ultimately led to more than $40 billion in investor losses when cryptocurrencies TerraUSD and Luna collapsed in May 2022.

Legal problems

After the crash, Kwon became a fugitive who evaded authorities until his capture in Montenegro in 2023 on unrelated charges. Both South Korea and the United States sought his extradition, leading to protracted legal battles. The co-founder was finally sent to the latter in December 2024

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

On January 2, 2025, he made his first appearance in a United States court and pleaded not guilty to the criminal charges. He remains in custody, with his next court hearing scheduled for January 8.

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