Terra Collapse May Have Impacted Over a Million Victims, Say U.S. Prosecutors in Do Kwon Case
The 2022 collapse of the Terra ecosystem likely affected more than a million individuals and organizations, according to newly filed court documents in the case against Terraform Labs founder Do Kwon. While Terra’s downfall didn’t receive the same level of media coverage as the FTX scandal, the scale of its impact may have been even greater.
Prosecutors claim that accurately quantifying the number of victims is challenging, but the total is believed to exceed hundreds of thousands, possibly reaching over a million. Due to this vast number, notifying each victim individually has been deemed impractical.
Do Kwon, the creator of Terra’s key products—LUNA token and the TerraUSD (UST) algorithmic stablecoin—recently pleaded not guilty to multiple U.S. criminal charges, including fraud, in a New York court. The collapse of Terra wiped out approximately $40 billion in market value, leaving countless investors with devastating financial losses.
UST, an algorithmic stablecoin designed to maintain a fixed value pegged to the U.S. dollar, failed to hold its peg, triggering a rapid and complete collapse of the Terra ecosystem.
U.S. prosecutors allege that Kwon misled investors by marketing Terraform’s products as stable and legitimate while concealing significant flaws and manipulation. This alleged deception created a false sense of security and trust in a supposedly decentralized financial system, leading many to invest.
Kwon is now facing nine criminal charges in the U.S., including securities fraud, wire fraud, commodities fraud, and conspiracy to commit money laundering. He also faces separate charges in South Korea.
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