Do Kwon’s Fraud Victims Exceed One Million: Court Filing

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As a researcher, I’ve found an alarming estimation suggesting that over a million global investors may have collectively lost around $40 billion due to the downfall of Terra-LUNA, as indicated in court documents pertaining to the criminal case against Terraform Labs co-founder, Do Kwon.

On January 6th, Acting U.S. Attorney Daniel Gitner submitted a notice in the Southern District of New York’s U.S. District Court, detailing actions to make victims aware of their rights. Given the large number of affected parties, the government intends to create a special website for public hearings, as other methods are found impractical.

Gitner clarified that because many transactions occur on international platforms or through anonymous cryptocurrency wallets, it’s challenging to accurately count the victims. However, experts approximate that potentially hundreds of thousands of people and organizations might have been impacted.

Although it’s challenging to provide an exact figure, experts suggest that Kwon may have had hundreds of thousands, if not over a million, victims,” according to Gitner.

Kwon’s Extradition Saga Ends — He Pleaded Not Guilty

On January 2nd, for the first time, Do Kwon stood before a judge in New York City. This was after his extradition from Montenegro. He denied the nine felony fraud allegations related to Terraform and consented to continue his detention. His extradition served as the conclusion of a prolonged legal drama that traversed various countries.

As a crypto investor, I found myself in a precarious situation when Montenegrin authorities detained me back in March 2023, as I attempted to board a flight to Dubai using a falsified passport. Consequently, I served a four-month prison term for the fraudulent document charges. However, my ordeal took an unexpected turn when Montenegro granted my extradition to the United States in December 2024, effectively concluding a drawn-out diplomatic standoff between Montenegro and South Korea, where I also face legal proceedings for similar allegations.

In simple terms, the breakdown of the Terra digital ecosystem in May 2022 led to an unforeseen turmoil in the crypto market. The Terra-linked stablecoin, TerraUSD (UST), was intended to hold a consistent value equivalent to one US dollar through its interaction with the LUNA token. However, due to unexpected circumstances, UST failed catastrophically and no longer maintained its dollar value.

The sudden uncoupling led to a catastrophic chain reaction, wiping out approximately $40 billion in worth within just a few days. This incident severely undermined trust across the cryptocurrency sector, playing a significant role in a wider market slump that saw Bitcoin drop below $20,000 and Ethereum suffer a loss of over 70% of its value.

Critical Pretrial Conference Set for Jan. 8

In Montenegro, a jury from New York determined that Kwon and Terraform were responsible in a $4.47 billion civil fraud case brought forth by the SEC. This lawsuit, which eventually led to Terraform’s bankruptcy, underscored how the collapse of the ecosystem contributed to wider financial turmoil, such as the downfall of FTX.

In January 2025, Do Kwon stands at a critical juncture in his legal struggle, dealing with several criminal accusations in the U.S. A significant pre-trial hearing on January 8th is set to kick off what authorities refer to as an influential cryptocurrency fraud case. The authorities claim that Kwon intentionally deceived investors about the stability of TerraUSD (UST), the key algorithmic stablecoin within the Terra system.

The catastrophic failure left a deep impact on the project’s staunch advocates, often referred to within the cryptocurrency realm as “Lunatics.” These individuals had put sizable chunks of their savings at stake, relying on Kwon’s public statements about the protocol’s dependability.

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2025-01-07 02:21