Do Kwon, founder of Terraform Labs, is officially heading to trial in January 2026. The charges? Criminal fraud tied to the $40 billion collapse of TerraUSD and Luna, two cryptocurrencies that turned the crypto market upside down in 2022.
The trial, set to take place in New York, will be overseen by Judge Paul Engelmayer and is expected to stretch for four to eight weeks. Kwon’s legal saga has been anything but ordinary. His not-guilty plea last week caps a two-year extradition battle that saw both the United States and South Korea vying to prosecute him.
After months on the run, hiding from authorities, and eventually getting arrested in Montenegro on unrelated charges, Kwon is now set to face U.S. prosecutors who are ready to hold him accountable for what they’re calling one of the largest fraud cases in crypto history.
$40 billion lost, over a million affected
Prosecutors claim Kwon’s actions wrecked lives—over a million of them, to be exact. Acting U.S. Attorney Daniel Gitner says that the number of victims includes individuals and organizations worldwide who invested in Terraform’s so-called decentralized financial ecosystem.
His filing to the District Court for the Southern District of New York yesterday said that determining the full extent of the damage is “challenging” due to the massive scale of transactions involving Terraform’s tokens, TerraUSD and Luna.
“The Government estimates that the number of victims in this case exceeds hundreds of thousands of individuals and entities, and potentially totals more than one million,” Gitner wrote. Instead of reaching out to every affected person, the government plans to launch a public website to keep victims updated on the case, citing the impracticality of individual notifications.
The charges against Kwon center on allegations that he deceived investors by marketing Terraform as a revolutionary decentralized platform. The system, which promised a blockchain-powered currency, payment network, stock market, and savings bank, was, according to prosecutors, built on lies.
The indictment claims that Kwon and his team falsely portrayed Terraform as autonomous and governed by its users while maintaining tight, behind-the-scenes control.
When TerraUSD and Luna imploded in May 2022, they wiped out $40 billion in market value. U.S. prosecutors accuse Kwon of orchestrating the collapse through “manipulative and deceptive” tactics that misled investors and left them with massive losses.
After the Terra ecosystem collapsed, he vanished. For months, he evaded authorities until his arrest in Montenegro in 2023. Both South Korea and America filed criminal charges against him, kicking off a lengthy extradition battle. In December, Kwon was finally handed over to U.S. officials.
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