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- Do Kwon pleads not guilty to fraud charges linked to the $40B TerraUSD collapse, impacting over 1M victims worldwide.
- His extradition and trial underscore growing efforts to address crypto-related fraud and enforce accountability.
Following the latest update on Terraform Labs co-founder Do Kwon, CNF reported that he pleaded not guilty to U.S. fraud charges related to the $40 billion TerraUSD stablecoin collapse. Prosecutors estimate that the collapse impacted over a million individuals globally.
A January 6 court filing from Acting U.S. Attorney Daniel Gitner outlined plans to inform victims about their rights via a dedicated website, citing the impracticality of traditional methods due to the large volume and complexity of transactions. The filing states:
Given the number of potential victims in this case, the Government respectfully submits that it is impracticable to give individualized notice to each potential victim. Specifically, the Government does not have contact information for many of Kwon’s victims, and in any event, the Government’s victim notification system is not capable of sending out victim notifications to hundreds of thousands or millions of victims.
The case stems from the 2022 crash of the Terra ecosystem, which played a pivotal role in the broader crypto market downturn.
Legal Battle Heats Up After Extradition
Extradited to the U.S. from Montenegro in December 2024, Do Kwon faces nine felony charges, including fraud. In his first U.S. court appearance on January 2, Kwon pleaded not guilty and remains in detention.
He is accused of orchestrating fraudulent activities at Terraform Labs, causing substantial financial losses for investors. The Terra ecosystem’s collapse also contributed to several crypto firms filing for bankruptcy.
High-Profile Case Amid Crypto Legal Turmoil
Kwon’s case is one among many high-profile legal battles involving crypto leaders, such as FTX’s Sam Bankman-Fried and Celsius’s Alex Mashinsky. In April 2024, Kwon and Terraform were found liable for fraud in a separate SEC civil case, agreeing to pay $4.5 billion in penalties.
The ongoing criminal proceedings could further define accountability in the cryptocurrency sector as authorities navigate the complexities of cross-border enforcement and crypto-related crimes.
In a related case, CNF reported that when Terraform Labs wound down after a court ruling, LUNC and LUNA prices spiked. At the time of writing, Terra Classic (LUNC) is trading at $0.0001204, reflecting a 0.25% decrease in the past day but a 12.72% increase in the past week. See LUNC price chart below.
