The collapse of the Terra ecosystem in 2022 didn’t make as many headlines as FTX, but the total death toll could exceed 1 million, according to new court documents.
Documents filed this week claims that the death toll of disgraced crypto tycoon Terraform Labs founder Do Kwon is “difficult to accurately quantify.”
Kwon last week he pleaded not guilty in a New York court on US criminal charges including fraud collapse from Terra crypto ecosystem. His crypto project went up in flames in 2022, leaving behind a $40 billion black hole and many investors out of pocket.
“Due to the number of potential victims in this case, the government politely submits that it is impracticable to individually notify each potential victim,” the court document said Monday.
It added that the government believed the death toll “exceeds hundreds of thousands of individuals and entities and potentially reaches more than 1 million”.
Kwon founded the Terra cryptoecosystem, whose main products were the flagship token LUNA and the algorithmic stablecoin TerraUSD (UST). Investors used it as a gateway to the world of decentralized finance, or DeFi, and LUNA quickly became one of the most valuable cryptocurrencies on the market.
But the UST stablecoin failed to maintain a stable peg to the US dollar and the entire ecosystem collapsed, wiping out its market capitalization very quickly.
Authorities now say Kwon led investors into a fake project to enrich himself. The feds in both the US and Korea charged him with a crime. In the US it is Kwon faces nine criminal chargesincluding securities, wire and commodity fraud and money laundering conspiracy.
“Behind the scenes, Terraform’s core products did not work as Kwon advertised and were manipulated to create the illusion of a functioning and decentralized financial system to attract investors,” the document said Monday.
Terra collapsed before FTX’s own bankruptcy in 2022. FTX, once a huge crypto brand that allowed users to quickly buy and sell digital coins and tokens collapsed due to criminal mismanagement.
After a much-publicized criminal trial, co-founder Sam Bankman-Fried now serving 25-year sentence for involvement in the collapse of his crypto company. His lawyers did appealed the verdictclaiming an unfair trial.
