LUNA Surges 45.14% in 24 Hours as Prosecutors Seek 12-Year Sentence for Do Kwon

On December 6, 2025, the LUNA token rose 45.14% within 24 hours to trade at $0.1514, continuing its impressive momentum with a 115.17% gain over seven days and a 102.35% increase in one month. The one-year performance, however, remains negative, with a 64.77% decline over the trailing 365 days. The rally comes as U.S. prosecutors filed a sentencing recommendation seeking 12 years in prison for Terraform Labs co-founder Do Kwon, who played a central role in the 2022 collapse of the TerraUSD (UST) and LUNA tokens. The prosecution has framed the case as one of the largest cryptocurrency frauds in history, citing damages exceeding $40 billion and systemic impacts on the crypto market.

The Terra ecosystem, which relied on an algorithmic stablecoin model, collapsed in May 2022 when UST, designed to maintain a $1 peg, depegged due to cascading market pressures. Prosecutors allege that Do Kwon and his team knowingly misled investors about the stability and safeguards of the system. The collapse led to a death spiral where LUNA’s value plummeted to near zero, triggering a broader downturn in the digital asset market and intensifying the so-called “Crypto Winter.” The case has drawn attention for its scale and complexity, surpassing other major crypto frauds in terms of losses and investor impact.

In its sentencing memorandum, the prosecution highlighted the unprecedented nature of the Terra fraud and its ripple effects across the financial system. The filing argues that the collapse was not an isolated event but rather a catalyst for broader instability in the crypto sector. U.S. authorities emphasized the deliberate nature of the fraud and the need for a robust sentence to deter future misconduct in the fast-evolving digital asset landscape. The request for a 12-year prison term reflects the gravity of the losses and the systemic risks the fraud introduced into the market.

Do Kwon’s defense, meanwhile, has pushed for a significantly shorter sentence—no more than five years—arguing that he has already spent two years in detention in Montenegro while extradition proceedings were ongoing. The defense has also cited the possibility of additional charges in South Korea, where Kwon could face up to 40 years in prison if extradited after serving a U.S. sentence. The argument for leniency hinges on the dual jurisdictional challenges and the already harsh conditions of his pretrial detention.

The case underscores growing regulatory scrutiny of algorithmic stablecoins and their underlying mechanisms. Following the Terra collapse, global regulators and central banks have intensified their focus on the risks posed by uncollateralized stablecoin models. The U.S. Securities and Exchange Commission (SEC) and other financial authorities have used the Terra case as a reference point in shaping new regulatory proposals aimed at preventing similar events. The legal outcome in Do Kwon’s case could further influence how regulators approach innovation and risk in the crypto space.

The sentencing hearing is scheduled for December 11 in the Southern District of New York. The outcome will not only determine Do Kwon’s future but may also serve as a benchmark for future crypto-related legal cases. Investors and legal observers alike are watching closely as the U.S. justice system grapples with the unique challenges presented by digital asset fraud.