The collapse of the Terra-Luna ecosystem continues to unravel, as U.S. prosecutors reveal the staggering scale of its impact. Federal authorities have now estimated that more than one million people could have been affected by the catastrophic failure of TerraUSD, an algorithmic stablecoin, that shook the cryptocurrency world in May 2022.
At the center of this crisis is Do Kwon, the co-founder of Terraform Labs, who stands accused of orchestrating the collapse. After being extradited from Montenegro in December 2023, Kwon made his first appearance in a U.S. federal court on January 2, 2025. He pleaded not guilty to nine felony charges, including fraud, criminal conspiracy, and money laundering. These charges stem from the collapse of TerraUSD, which lost its peg to the U.S. dollar, triggering the downfall of the entire $40 billion Terra-Luna ecosystem.
As the case progresses, the number of victims remains a significant concern. According to the U.S. District Court for the Southern District of New York, prosecutors have estimated that over one million individuals and entities may have suffered losses. The sheer scale of the collapse makes it nearly impossible to contact every affected party directly.
To address this challenge, Acting U.S. Attorney Daniel Gitner has proposed a public website to keep victims informed. This digital platform will provide updates on the case and allow victims to file notices to be heard during court proceedings. The government aims to ensure that victims’ rights are preserved, acknowledging that direct communication is impractical in such a massive case.
Do Kwon’s legal troubles are far from over. Facing multiple charges, including securities fraud and commodities fraud, he could face up to 50 years in prison if convicted. The full extent of the collapse and its impact on victims will likely come to light in the coming months, with Kwon’s next court appearance scheduled for January 8, 2025.
Also Read: Terra Luna: Crypto Influencer Exposes Alleged Deception Behind $40 Billion TerraUSD Collapse
As this case unfolds, it marks one of the most significant events in cryptocurrency history, with lasting implications for the industry.
Disclaimer: The information in this article is for general purposes only and does not constitute financial advice. The author’s views are personal and may not reflect the views of Chain Affairs. Before making any investment decisions, you should always conduct your own research. Chain Affairs is not responsible for any financial losses.
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