US Prosecutors Estimate Over 1 Million Victims in Do Kwon Crypto Fraud Case

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The significant number at hand serves as a crucial aspect in the current legal battle against Kwon, offering insights into the far-reaching consequences of the Terra crash and the subsequent economic ruin it caused.

In a recent court hearing in New York, Acting U.S. Attorney Daniel Gitner emphasized the complexity of determining exactly how many people have been impacted by the actions of the accused, Do Kwon. He explained that due to the large volume of transactions involving Terraform’s cryptocurrencies and their intricate nature, it is challenging to pinpoint an exact number of victims. However, in court documents, Gitner stated that the government believes the number of victims could be over half a million individuals and entities, with a potential total exceeding one million.

The Victim Count

The immense number of victims highlights the vast scope of the alleged fraud, according to prosecutors. They argue that Kwon’s Terra ecosystem deceived investors by promising a decentralized financial network equipped with cutting-edge technologies including its own digital currency, payment system, and even a platform resembling a stock market. However, they claim that the autonomy of the Terra system was falsely emphasized, hiding the centralized control held by Kwon and his team. This led investors to mistakenly believe they were investing in a secure and pioneering venture that was actually under centralized management.

In May 2022, the failure of stablecoin TerraUSD (UST) and its related cryptocurrency Luna resulted in financial losses exceeding $40 billion. This collapse didn’t just impact individual investors, but also larger institutional entities, causing them distress and financial strain. According to court records, it is claimed that the losses were due to fraud on Kwon’s part, portraying a dire scenario of the extensive impact of the Terra crisis.

In light of the ongoing trial, prosecutors are devising strategies to tackle the challenge of informing a vast group of potential victims, estimated at over one million. Since it’s unmanageable to contact each individual directly, the U.S. government is considering setting up a public website where information about case developments and the rights of victims under the Justice for All Act of 2004 can be found. This move forms part of an extensive plan aimed at allowing victims to stay updated on court dates, filing procedures, and potential compensation processes.

Legal professionals are pointing out that the Do Kwon situation may establish a substantial precedent regarding how extensive cryptocurrency fraud is handled. Given the vast number of potential victims, it underscores the immediate need for stronger regulatory structures within the crypto market. As per recent comments by financial and legal experts, this event has shaken investor trust and underscored the importance of increased supervision, transparency, and safeguards for investors in the cryptocurrency world.

Currently, Do Kwon, aged 33, is confronting numerous criminal accusations in the U.S., such as securities fraud, wire fraud, commodities fraud, and conspiracy to commit money laundering, among others. After his extradition from Montenegro in December 2024, he pleaded not guilty during his initial court appearance on January 2, 2025. If found guilty on all charges, he could potentially serve up to 130 years in prison.

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2025-01-09 11:52