Do Kwon’s crypto collapse could impact over 1 million victims, US prosecutors estimate

US prosecutors overseeing the criminal case against Do Kwon, co-founder of Terraform Labs, estimate that over one million individuals could have been affected by the ecosystem’s collapse.

Acting US Attorney Daniel Gitner claimed the government would establish a website to help inform victims of their rights, calling other notification methods “impracticable.”

The US government prefers to use a website to communicate with victims of the Terra case

The US government approximates the number of victims affected by the Terra ecosystem collapse to be over 1 million. 

Acting US Attorney Daniel Gitner submitted a motion to the US District Court for the Southern District of New York on January 6 describing the procedures for notifying potential victims of Do Kwon’s public proceedings.

The US attorney claimed the government would set up a website to inform victims of their rights, tagging other traditional methods “impracticable” due to the decentralized nature of cryptocurrency transactions, which often lack personal identifying information.

Terra collapsed in May 2022, and Do Kwon is charged with nine fraud felonies

In May 2022, Terra, once the third largest cryptocurrency after Bitcoin and Ether, crumbled, losing its $50 billion valuation in just 72 hours. When founder Do Kwon launched Terra, he claimed he wanted to build an ecosystem better than Bitcoin and Ethereum. He added that he needed a stablecoin to compete directly with fiat currencies. Sadly, his entire project lacked transparency.

According to the US Department of Justice, Kwon misled investors by falsely claiming the company’s blockchain products and manipulated their markets to create the illusion of a functioning and decentralized financial system.

Earlier this year, Kwon was extradited from Montenegro to the United States, where he now faces nine felony fraud charges. On January 2, he appeared before a US judge for the first time and pleaded not guilty.

However, authorities have yet to clarify if they will pursue a plea agreement with the Terraform co-founder or whether they will proceed to a full criminal trial. 

Due to his fraud involvement, Kwon already had to pay a $4.5 billion settlement to the U.S. Securities and Exchange Commission in April 2024.

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