It’s estimated by U.S. prosecutors that approximately a million people worldwide may be affected by the collapse of the Terra ecosystem, with Do Kwon, co-founder of Terraform Labs, being one of the key figures involved.
On January 6, 2025, it was asserted in a New York City court that Kwon stood accused of nine felony charges linked to fraudulent activities at Terraform Labs.
As a crypto investor closely following the developments surrounding Terraform Labs, I understand that the U.S. government, as outlined by Acting U.S. Attorney Daniel Gitner in his submitted document, intends to inform affected parties about their rights under the Justice for All Act of 2004. Given the unprecedented magnitude and international scope of Terraform Labs’ dissolution, conventional methods of communication were deemed infeasible. Instead, the government is considering creating a publicly accessible website dedicated to the case proceedings involving Kwon, with the aim of keeping all parties informed.
The filing stated:
Given the large volume of transactions involving Kwon’s cryptocurrencies on various exchanges and platforms, as well as the anonymous nature of many of these trades, it’s challenging to pinpoint an exact number. However, the authorities believe that over half a million people might have been affected, with the total possibly reaching more than one million.
Under the Justice for All Act, victims of federal crimes are granted specific privileges including prompt updates on court hearings, the ability to voice their opinions during sentencing or plea negotiations, and eligibility for restitution if necessary. In instances where numerous victims are involved, courts have leeway to establish reasonable procedures for handling these cases effectively.
As a crypto investor, I’ve been closely following the legal saga of Do Kwon since the downfall of Terra’s ecosystem in 2022. The collapse left billions of dollars in investments evaporated and played a significant role in the broader crypto market’s decline. In December 2024, after months of complex negotiations spanning various jurisdictions like South Korea, Kwon was extradited to the U.S. Following his apprehension in Montenegro in 2023 on unrelated charges.
On January 2, 2025, Kwon made his initial court appearance in the U.S., denying the allegations against him. He remains in custody at this time. Previously, in April 2024, both Kwon and Terraform Labs were accused of fraud by the Securities and Exchange Commission in a civil lawsuit. As a result, they were ordered to repay approximately $4.5 billion in compensatory damages, fines, and interest in this case.
In the progression of this situation, it’s anticipated that the government’s victim notification site will play a crucial part in upholding the legal entitlements of victims, without overwhelming court proceedings. For victims, this is a meaningful stride towards transparency and recognition of the damages incurred due to Terraform Labs’ downfall.
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2025-01-07 06:02