Do Kwon’s Victim Count May Top One Million, Court Documents Reveal

US prosecutors have revealed the full scope of alleged victims in the Terra/LUNA collapse. It is estimated that over one million individuals and entities worldwide may have been affected by Do Kwon’s actions.

This figure appeared in court documents filed January 6, 2025, as prosecutors outlined plans to notify victims of their legal rights in the criminal case against the Terraform Labs co-founder.

Acting US Attorney Daniel Gitner submitted the filing to the Southern District of New York, explaining that traditional victim notification methods would be impossible given the unprecedented number of affected parties.

The government plans to create a dedicated website to keep victims informed of public proceedings, as direct communication with such a vast number of individuals across multiple countries remains impractical.

Many Terra investors remain anonymous

The Southern District Court filing outlines specific challenges in managing a criminal case of this scale. Prosecutors face unique hurdles in notifying victims, as many Terra/LUNA investors traded through foreign exchanges or anonymous crypto wallets. This makes traditional court notification methods, designed for hundreds of victims, unsuitable for a case potentially affecting millions.

Following his January 2 court appearance, Kwon pleaded not guilty to nine felony charges related to the Terra/LUNA collapse. The court ordered him held in detention while awaiting trial.

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The charges stem from the May 2022 collapse of Terraform Labs’ ecosystem, which prosecutors say caused over $40 billion in losses and helped trigger a broader crypto market downturn.

The case builds on earlier legal actions against Kwon. In April 2024, a civil case brought by the SEC resulted in Kwon and Terraform Labs being found liable for fraud. That judgment required them to pay $4.5 billion in penalties, disgorgement, and interest, though the criminal case now brings additional potential consequences.

Kwon’s path changed after his 2023 arrest

The Terra/LUNA case joins other major cryptocurrency prosecutions in New York’s Southern District. The court currently handles cases against former FTX CEO Sam Bankman-Fried and former Celsius CEO Alex Mashinsky. This collection of cases in a single jurisdiction has made the Manhattan federal court a central venue for cryptocurrency fraud prosecution.

Kwon’s path to the US courtroom took several turns. After his 2023 arrest in Montenegro on passport-related charges, both US and South Korean authorities sought his extradition.

The decision process lasted until December 2024, when Montenegrin officials chose to send him to face US charges. This delay allowed prosecutors time to build their case while examining the collapse’s effects on global crypto markets.

The Terra/LUNA failure in 2022 created ripple effects through cryptocurrency markets. Several crypto companies filed for bankruptcy in its wake, as the collapse triggered broader market instability.

Prosecutors note these widespread consequences in their filing, pointing to how a single project’s failure affected both direct investors and the wider digital asset industry.

Court faces several changes

The court must now manage several practical challenges as the case moves forward. The website notification system will alert victims about hearings, plea proceedings, and sentencing dates. This matches methods used in other large fraud cases, where traditional mail or email notification proved impossible due to the number of victims.

The prosecutors’ filing opens questions about possible plea negotiations. Other crypto executives facing similar charges have taken different paths – former Binance CEO Changpeng Zhao pleaded guilty to one felony charge, while Sam Bankman-Fried chose to go to trial. For Kwon, the scale of alleged victims may affect both plea discussions and potential sentencing.

The Terra case could set precedents for future cryptocurrency fraud prosecutions. The court’s handling of such a large victim group, spanning multiple countries and often lacking clear identifying information, creates new territory for criminal proceedings.