Terra Victims Could Number One Million, Say Do Kwon Prosecutors

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• Federal prosecutors estimate over one million people and entities may have been victims of Do Hyeong Kwon’s alleged cryptocurrency fraud
• Kwon is accused of orchestrating a $40 billion scheme through Terraform Labs, misleading global investors
• The government has proposed a public notification system due to the sheer scale of the victim pool

More than one million individuals worldwide may have fallen victim to the alleged $40 billion cryptocurrency fraud orchestrated by Terraform Labs co-founder Do Kwon, according to federal prosecutors. Kwon faces charges for misleading investors about the functionality of Terraform’s products, where the true scale of the alleged fraud is coming to light. Due to the unprecedented number of victims, the government is seeking approval to use a public online notification system to inform them of court proceedings.

Over One Million Victims Identified

Federal prosecutors have revealed that the victim count in the criminal case against Kwon could exceed one million, making it one of the largest fraud cases in cryptocurrency history. The allegations center around Terraform Labs, which Kwon co-founded in 2018, and its creation of a cryptocurrency ecosystem that promised decentralized and reliable financial solutions. However, prosecutors allege the entire system was built on deceptive practices and manipulated technology.

Prosecutors yesterday filed a motion to establish a victim notification portal, in which it laid bare its accusations, alleging, “Kwon’s constructed financial world was built on lies and manipulative techniques. The filing also highlighted how Terraform’s products were presented as advanced financial technologies while being secretly rigged to mislead investors.

Between 2018 and 2022, Kwon is alleged to have inflated the value of Terraform’s cryptocurrencies by creating an illusion of functionality and decentralization. The scheme reportedly allowed Kwon and his associates to profit significantly, leaving investors with losses totaling over $40 billion when the fraud unraveled. Victims include individuals and institutions from the US and abroad who purchased Terraform’s cryptocurrencies directly or through exchanges.

Public Notification for Victims

Due to the scale and decentralized nature of cryptocurrency transactions, prosecutors have argued that individually notifying victims is impractical, proposing instead the use of the website of the U.S. Attorney’s Office for the Southern District of New York to post updates on court proceedings. This approach complies with the Justice for All Act, which ensures victims’ rights to timely and reasonable notice of public legal actions.

This Do Kwon case highlights the challenges of addressing large-scale fraud in the cryptocurrency sector, where anonymity and global reach complicate accountability. The outcome could set a precedent for how courts handle victim notification in similarly vast financial fraud cases and influence regulatory oversight of digital assets.

A ruling on the government’s notification proposal is expected soon, potentially marking a significant step in managing the ongoing Terra fallout.