Terra LUNA Case, Do Kwon Charged With Loss Of Investors Of IDR 620 Trillion

Terra (LUNA) slumped sharply by 99 percent in May 2022. (Photo; Doc. BeinCrypto)

JAKARTA Founder of Terraform Labs, Do Kwon, faces serious charges that could affect more than one million victims worldwide. These allegations were filed by US prosecutors after Kwon was extradited to the United States at the end of last month from Montenegro.

Kwon, who is in the spotlight for the fall of the Terra (LUNA) ecosystem in 2022, is now facing charges of fraud that cost investors up to US$40 billion (Rp620 trillion). In the latest court documents, prosecutors say that Kwon's financial scheme builds on "lies as well as manipulative and misleading techniques" that deceive investors, business partners, and regulators across countries.

According to prosecutors, Kwon's fraud scale is huge. "The victims of this case include individuals and entities in the United States and abroad who buy Terraform crypto assets, either directly from the company or through crypto exchanges," the document said. Prosecutors estimate the number of victims reaches hundreds of thousands to more than one million individuals and entities, given the complexity of transactions on digital platforms without personal identity information.

Terra's fall, which was previously one of the most promising crypto projects, came after the TerraUSD (UST) stablecoin algorithm lost its ties to the US dollar, triggering LUNA's price collapse. This incident affected the crypto market widely and caused huge losses to retail and institutional investors.

Additional information, 2022 is the year that rocked the crypto industry the most. Starting with the collapse of Terra (LUNA) whose value fell by more than 99 percent in May 2022. The drop in LUNA has eliminated and investors amounted to USD 40 billion (equivalent to IDR 624 trillion) in just one week.

LUNA's fall dragged major players into the crypto industry including Three Arrows Capital, Celsius, and others, into filing for bankruptcy. Recently, the founder of Three Arrows Capital, Zhu Shu, revealed an important actor behind Terra LUNA's destruction.

In a statement, Zhu Su blamed the Digital Currency Group (DGC), which is the holding company Grayscale Investment and Genesis Trading. Su accused DCG of being an important actor behind Terra (LUNA)'s collapse in May last year.

Not only that, DCG is claimed not to be alone in bringing down LUNA. DCG conspired with Sam Bankman-Fried's crypto trading company, FTX. Even though the company itself went bankrupt, Zhu Su considered that DCG and FTX had actually suffered heavy losses.

Do Kwon was arrested by Montenegro authorities in 2023 while trying to leave the country with a fake Costa Rica passport. After his arrest, both the United States and South Korea submitted requests for extradition. In December 2024, Montenegro's highest court decided to extradite Kwon to the United States.

This case serves as a strong reminder of the risks in the digital asset market, especially those related to less transparent projects. Observers think that the Do Kwon case can be an important precedent in crypto industry oversight and regulation, where investor protection is often still a major challenge.

With the indictment filed, Do Kwon faces the threat of severe punishment, as well as pressure to answer the huge losses suffered by the victims. On the other hand, the names dragged and involved in the fall of Terra LUNA are still not indicted.