These somber victim letters helped seal the fate of Terra founder Do Kwon

There may have been millions of victims in the $40 billion collapse of Terra’s UST and LUNA, a US judge said Thursday during the sentencing of Terraform Labs founder Do Kwon. And 315 of those victims submitted letters detailing suicide, bankruptcy, and health crises, all harkening back to Do Kwon’s actions that led to the prominent crypto ecosystem’s demise in 2022.

U.S. District Judge Paul Engelmayer said he had read all 315 letters, according to reporting from Press city centereven staying up late and canceling plans to do so – calling the statements ‘impactful’.

The judge asked Kwon if he had “read them all” and offered to postpone the hearing because 30 late notice letters had been filed. Kwon declined, but said he would read them “as soon as possible.”

Considering the 15 years in prison has been pronounced at the end of the hearing, he still has plenty of time to catch up on the matter. The letters – they are available for the public to read via official court logs – reveal the human impact of Do Kwon’s fraud.

“The Terra/LUNA collapse had a catastrophic impact on my life and my family,” wrote an unnamed victim, who claims to have lost $500,000. “We lost our financial safety net, our retirement plans and the stability we thought we deserved.”

“Simple things like taking our children on outings, offering special gifts or planning any kind of vacation are no longer possible,” she added. “We have been pushed to the bottom financially and every day has become a struggle to keep our heads above water.”

Many of the letters detail losses ranging from thousands to millions, with one victim claiming this led to bankruptcy. The impact of these losses affected every aspect of their lives, from the decline of mental and physical health to the breakdown of families and relationships.

One victim, Anita Youabian, said she was diagnosed with a health problem during the collapse and that the “suffocating stress” of losing $200,000 significantly worsened her symptoms – to the point where she is in constant pain.

Another victim, Nicholas, claimed he lost $62,000, on which he earned a 20% return through the now infamous Anchor protocol. This was Terra’s most popular DeFi app, as it offered mouth-watering returns on UST stablecoins – what some considered a risk-free investment, at least until the UST stablecoin lost its peg forever. He said the loss caused a rift in his relationship that ended in divorce, splitting his family apart and eventually forcing him to live with his parents.

For some, it seems their financial losses were too great to handle.

“My friend and I were very large LUNA investors, based on Do’s statements that the link was automatically reinstated in 2021,” reads an emailed victim letter from Josh Golder. “I had about an 8 figure loss in Luna (yes, that’s right), and my friend later jumped off a building in Miami after telling his girlfriend (it’s in the police report) that he lost his money in crypto.”

Emotional weight

Ariel Givnercrypto lawyer and founder of Givner’s lawsaid Kwon’s team’s refusal to postpone the hearing was “almost certainly strategic and by no means dismissive.” This is because a delay “could unintentionally increase the emotional weight of the letters and shift a procedural hearing to something closer to a victim impact forum.”

It’s worth noting that not all victims made statements in hopes of aggravating Kwon’s sentence. For example, despite her deteriorating health, Youabian suggested that Kwon not go to prison, but rather be forced to create a system that would repay all victims — saying that the Terraform Labs founder is “obviously a genius.” Others wanted Kwon to face the full force of the law and receive the maximum sentence.

Some spectators speculated online that the judge offered Kwon a chance to express remorse for the victims — a hurdle some believe he failed at. Givner, however, backtracked on this interpretation.

“In my opinion, the judge was not trying to create remorse,” said Givner, who previously worked as a court clerk. Declutter. “When a judge raises the issue of a notice or directly asks the defendant whether he or she wishes to proceed, the issue is ensuring procedural fairness and creating a clean record, not inviting an apology or an emotional response.”

Still, the judge cited the letters in the run-up to Kwon’s sentencing.

“Victims, I heard you and your letters,” the judge said per Press city center. “Here are a few: ‘My loss was $62,000, I thought it was low risk.’ K writes, “I thought about suicide because I advised my father to invest $100,000, his savings.” Another wrote: ‘I can’t support children now.’”

“The investors took a risk,” the judge continued, “but they did not take the risk of becoming victims of fraud.”