The Terra ecosystem collapse in 2022 didn't make as many headlines as FTX, but the total number of victims could exceed 1 million, according to new court documents.

The documents filed this week allege that the number of victims of disgraced crypto mogul, Terraform Labs founder Do Kwon, is “difficult to precisely quantify.”

Kwon last week pleaded not guilty in a New York court to U.S. criminal charges including fraud over the collapse of the Terra crypto ecosystem. His crypto project went up in smoke in 2022, leaving a $40 billion black hole and many investors out of pocket. 

“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,” a Monday court document read. 

It added that the government believes that the number of victims “exceeds hundreds of thousands of individuals and entities, and potentially totals more than 1 million.”

Kwon founded the crypto ecosystem Terra, which had the flagship LUNA token and TerraUSD (UST) algorithmic stablecoin as its main products. Investors used it as a gateway into the world of decentralized finance, or DeFi, and LUNA quickly became one of the most valuable crypto coins on the market.

But the UST stablecoin couldn’t keep its stable peg to the U.S. dollar, and the entire ecosystem collapsed, wiping its market cap out very quickly.

Authorities now allege that Kwon conned investors into a sham project to enrich himself. Feds in both the U.S. and Korea have hit him with criminal charges. In the U.S., Kwon is facing nine criminal charges, including securities, wire, and commodities fraud, plus conspiracy to commit money laundering. 

“Behind the scenes, core Terraform products did not work as Kwon advertised, and were manipulated to create the illusion of a functioning and decentralized financial system in order to lure investors,” the Monday document read. 

Terra collapsed ahead of FTX’s own bankruptcy in 2022. FTX, once a huge crypto brand that allowed users to buy and sell digital coins and tokens, quickly collapsed due to criminal mismanagement.

Following a much-publicized criminal trial, co-founder Sam Bankman-Fried is now serving a 25-year sentence for his part in the collapse of his crypto company. His attorneys have appealed the judgment, claiming an unfair trial.

Edited by Andrew Hayward

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