Court Filing Suggests Do Kwon’s Alleged Victim Count Could Surpass One Million
Do Kwon, the embattled co-founder of Terraform Labs, now sits in United States custody after asserting his innocence to a slew of nine felony charges tied to fraudulent activities within his cryptocurrency platform.
Prosecutors steering the legal proceedings have posited that the ripple effect of Kwon’s alleged malfeasance might have ensnared over a million individuals globally, following the catastrophic downfall of Terraform’s ecosystem.
In a judicial submission dated January 6, lodged with the U.S. Acting U.S. Attorney Daniel Gitner of the Southern District of New York has introduced a process to ensure that stakeholders—Kwon’s alleged victims—are aware of their rights throughout the ongoing proceedings.
Gitner emphasized the scope of the project, noting that the government intends to create an online platform to disseminate information about the proceedings because conventional notification methods are deemed “impractical.”
“Given the staggering volume of transactions involving Terraform’s cryptocurrencies—many of which transpired on foreign exchanges or through digital wallets devoid of identifiable personal data—the government estimates that the victim count spans hundreds of thousands, potentially breaching the one-million mark,” noted Gitner.
Proposed order for Do Kwon’s victim notification. Source: Courtlistener
A Legal Odyssey Across Borders
Shortly after his extradition from Montenegro, Kwon made his judicial debut in the United States on January 2. He pleaded not guilty at the court and agreed to be held in custody while the case was being handled professionally.
Terraform’s dramatic collapse in 2022 was a seismic event that many believe exacerbated a widespread downturn in the cryptocurrency market, leaving a trail of bankruptcies in its wake. Kwon, a pivotal figure in this debacle, was apprehended in Montenegro in 2023 on unrelated accusations, sparking a jurisdictional tug of war as both the U.S. and South Korea vied for his extradition.
Sharing the Legal Spotlight
Kwon is not the only person in the Southern District of New York who is under investigation. Other cryptocurrency tycoons are involved in legal disputes under the same jurisdiction, such as former FTX CEO Sam Bankman-Fried and former Celsius CEO Alex Mashinsky. Meanwhile, former Binance CEO Changpeng Zhao faced his own reckoning, albeit in a separate venue, and recently pled guilty to a solitary felony charge in the Western District of Washington.
Montenegro delayed its decision on Kwon’s legal fate until December 2024, eventually transferring him to U.S. authorities to confront criminal charges. Whether prosecutors will contemplate a plea arrangement or proceed with a full-fledged trial remains shrouded in uncertainty.
The Securities and Exchange Commission (SEC) sued Kwon and Terraform in April 2024, and a US judge found both parties guilty of fraud. The judgment imposed a whopping $4.5 billion in fines, disgorgement, and interest on Kwon and his company due to the severity of their alleged crimes.