Luna, Luna Classic prices jump after prosecutors seek 12-year jail term for Terra’s Do Kwon

The prices of the Terra blockchain coins Luna and Luna Classic rose by 70-130% on December 6 after public prosecutors asked a US district court to jail Do Kwon, the co-founder of Terraform Labs, for 12 years.

Kwon is currently standing trial in Manhattan, New York, for his part in the $40 billion collapse of Terra ecosystem coins. TerraUSD, Terra’s US dollar-pegged stablecoin, lost its peg in May 2022, leading to nosedives in associated coins such as Luna Classic.

Prosecutors said that Kwon’s fraud was “colossal in scope,” Bloomberg reported, adding that his crime “merited a tough sentence.”

But the news appears to have had an unexpected result in the market, with the prospect of the Terra chief ending up behind bars apparently driving up demand for the coins.

Terra Luna Classic prices rose from around $0.000028 on December 4 to almost 0.00008 on the evening of December 6. They have since fallen back to around 0.00006 at the time of writing.

Terra Luna traders, meanwhile, saw prices shoot up from just over 0.07 to over $0.15 in a similar time period.

Kwon billed Luna as Luna Classic’s successor coin in 2022, a period where he fled his native South Korea and was eventually arrested while trying to leave Montenegro.

On X, some attributed the unexpected rises in part to a retro Terra Luna t-shirt sported by a journalist moderating a panel at the crypto exchange Binance’s Blockchain Week in Dubai on December 4.

Kwon to learn fate on December 11

Prosecutors told the court that Kwon had repeatedly lied to his customers, “triggering a series of cascading crises in the crypto world, including the collapse of Sam Bankman-Fried’s FTX exchange.”

The court is set to reconvene for sentencing on December 11.

Kwon has pleaded guilty to the prosecution’s charges, with his legal team asking the court for a five-year jail term.

The Terra chief’s legal team has previously struck a deal with prosecutors, who agreed not to ask the court to jail him for more than 12 years. The prosecution has also agreed to request that Kwon serve half of his sentence in South Korea.

In return, Kwon agreed to hand over more than $19.3 million worth of assets, in addition to some of his real estate holdings.

Bloomberg pointed out that the trial will come to a crux “at a time when the Trump administration has mostly weakened enforcement actions targeting cryptocurrency.”

The news agency noted that evidence of the above could be seen in President Donald Trump’s pardoning of the Binance founder Changpeng “CZ” Zhao in October.

Tim Alper is a news correspondent at DL News. Got a tip? Email at tdalper@dlnews.com.