U.S. Prosecutors Estimate Over 1 Million Victims in Terraform Labs Case

Prosecutors in the United States estimate that Do Kwon, co-founder of Terraform Labs, may have more than 1 million victims worldwide following the collapse of the Terra ecosystem. This claim was made before a New York City court on January 6, 2025, where Kwon is facing nine counts of felony related to fraud at Terraform Labs.

Victim Notification Process

In a document submitted by acting U.S. attorney Daniel Gitner, the government outlined its plan to notify victims about their rights under the Justice for All Act of 2004. Due to the global extent and immense scale of Terraform Lab’s dissolution, traditional methods of notifying victims were deemed impractical. Instead, the government proposed setting up a public website for Kwon’s case proceedings.

“While it is difficult to precisely quantify the number of Kwon’s victims in light of the sheer number of purchases and sales of Terraform’s cryptocurrencies and the manner of those transactions… the Government estimates that the number of victims, in this case, exceeds hundreds of thousands of individuals and entities, and potentially totals more than one million.”

Rights of Victims Under the Justice for All Act

The Justice for All Act provides that victims of federal crimes have specific rights, including:

  • Timely notification of public court proceedings
  • The opportunity to be heard during sentencing or plea agreements
  • The right to restitution if applicable

However, the Act allows courts to establish reasonable procedures in cases with a large number of victims.

Do Kwon’s Legal Troubles

Do Kwon has been facing long-standing legal troubles since the collapse of the Terra ecosystem in 2022, which resulted in the loss of billions of dollars in investors’ funds and contributed to the wider downturn of the cryptocurrency market. Kwon was extradited to the U.S. in December 2024 after protracted negotiations involving multiple jurisdictions, including South Korea, following his arrest in Montenegro in 2023 for unrelated charges.

On January 2, 2025, Kwon appeared before a U.S. court for the first time and entered a not-guilty plea to the charges against him. He is still being held in custody. Kwon and Terraform Labs were also charged with fraud by the Securities and Exchange Commission in a civil case in April 2024, resulting in an order to pay nearly $4.5 billion in disgorgement, civil penalties, and prejudgment interest.

Implications for Victims

The government’s victim notification website is expected to play a significant role in ensuring compliance with the statutory rights of victims without overburdening the court processes. For victims, this represents a step toward transparency and acknowledgment of the harms suffered as a result of the collapse of Terraform Labs.

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