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Journalist
Hassan Shittu
Journalist
Hassan Shittu
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U.S. prosecutors have estimated that Do Kwon, co-founder of Terraform Labs, could have defrauded over 1M victims globally following the catastrophic collapse of the Terra ecosystem.
This assertion emerged during a court session in New York City on January 6, 2025, where Kwon faces nine felony counts tied to his role in Terraform Labs’ activities.
The government, represented by acting U.S. attorney Daniel Gitner, filed a motion requesting court approval to notify victims about their rights under the Justice for All Act of 2004.
Due to the large number of potential victims, traditional notification methods were deemed impractical.
Attempting to reach over one million individuals through direct contact or mailed notices would require immense resources and time.
However, public notices and dedicated websites proved more efficient in disseminating information to affected parties.
As a result, the government proposed creating a public website to manage case proceedings and victim notifications.
According to the court document:
Justice for All Act and Victim Rights: Do Kwon Affected Over 1M Victims
The Justice for All Act of 2004 expanded crime victims’ rights within federal criminal proceedings, mandating timely notification and opportunities to participate in public court events.
According to the document, victims are entitled to protection from the accused, the right to confer with the prosecuting attorney, and restitution where applicable.
To exercise these rights, victims can submit written statements to the court, attend public hearings, and communicate directly with the U.S. Attorney’s Office handling the case.
Additionally, they may access updates and resources through the designated online platform, which will outline detailed steps for participating in sentencing or restitution processes.
Section 3771 of the Act ensures that victims are afforded several crucial rights.
Victims have the right to reasonable protection from the accused, safeguarding them from potential intimidation or harm throughout the legal process.
Additionally, victims hold the right to be heard during critical phases, such as plea, sentencing, or parole hearings, ensuring their voices contribute to the judicial outcome.
Moreover, Section 3771 guarantees victims access to full restitution and requires that legal proceedings unfold without unreasonable delays.
However, the Act acknowledges logistical difficulties in cases involving extensive victim pools.
In such instances, the courts can opt for an alternative.
Given the immense scale of the Terraform collapse, the government plans to post case updates on the U.S. Attorney’s website.
This online platform will allow potential victims to monitor court dates and assert their rights where necessary.
Terraform Collapse and Kwon’s Legal Woes
The collapse of Terraform Labs in 2022 erased over $40 billion in investor funds, leaving countless retail and institutional investors reeling.
This event led to the bankruptcy of several crypto hedge funds and exchanges and fueled heightened regulatory scrutiny.
Terraform’s blockchain technologies, including its algorithmic stablecoin TerraUSD, were marketed as revolutionary components of decentralized finance (DeFi).
However, prosecutors allege that Kwon misled investors through deceptive practices, fabricating the appearance of stability and technological advancement.
In fact, a recent report shows that Do Kwo could receive up to 130 years in prison for all charges count.
Kwon’s legal troubles have spanned multiple jurisdictions.
In December 2024, he was extradited to the U.S. following lengthy negotiations involving South Korea and other nations.
His extradition followed a 2023 arrest in Montenegro on unrelated charges.
Notably, a Jan 2 report shows that he has pleaded not guilty to U.S. fraud charges, but other charges remain.
