On the Eve of Do Kwon's Trial, $1.8 Billion Is Being Wagered on His Sentence
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On the Eve of Do Kwon's Trial, $1.8 Billion Is Being Wagered on His Sentence
Dead fundamentals, lively speculation.
Navigating Web3 tides with focused insightsAuthor: David, TechFlow
As of the evening of December 10, you may have missed something absurd in the LUNA token's contract data.
With no technical upgrades or positive ecosystem news, the combined 24-hour trading volume of the LUNA series contracts (including LUNA and LUNA2) across all markets has nearly reached $1.8 billion.
LUNA itself has also risen 150% over the past week.
For comparison, the combined trading volume of LUNA and LUNA2 now ranks among the top ten in overall market derivatives trading, just behind HYPE’s $1.88 billion.
Their respective funding rates are -0.0595% and -0.0789%.
High negative funding rates indicate that the market is not only crowded but also in a state of extreme divergence: substantial capital is shorting, while an even larger pool of capital is leveraging this congestion to force a short squeeze.
We all know LUNA has no fundamentals left. This $1.8 billion in liquidity is essentially betting on a lottery ticket about to be drawn:
Tomorrow, December 11 at 24:00, the former "king of stablecoins," Do Kwon, will face his final sentencing hearing in Courtroom 1305 of the U.S. District Court for the Southern District of New York.
The market is placing real money bets on the length of prison time for this former crypto tycoon.
Sentences May Vary, But Speculation Never Rests
To understand this $1.8 billion in futures trading volume, one must look at the current status of the case.
For most people, the name Do Kwon faded from view after the epic collapse of 2022.
In reality, the once-prominent crypto entrepreneur was extradited to New York City in late 2024. In August this year, he formally pleaded guilty at Manhattan Federal Court, admitting to multiple charges including securities fraud.
Tomorrow’s hearing isn’t about “guilty or not guilty,” but rather the final determination of sentence length. According to recent court filings, there is a vast gap between prosecution and defense recommendations:
Prosecution requests 12 years in prison.
The U.S. Attorney’s Office takes a hardline stance, citing billions of dollars in losses caused by the Terra crash and Do Kwon’s fraudulent claims regarding Chai payment app’s “false blockchain integration” prior to the collapse.
In the market’s eyes, 12 years means total termination. Given crypto’s four-year cycle, Do Kwon would be irrelevant for three full cycles.
Defense requests 5 years in prison.
The defense team plays the sympathy card, emphasizing that Do Kwon has already spent significant time detained in Montenegro and has shown good faith by cooperating with SEC penalty enforcement.
A seven-year difference creates enough uncertainty around the LUNA token to fuel intraday speculation and capital battles.
The conventional logic suggests that if the founder receives a harsh sentence, the LUNA token moves closer to zero. Hence, the market is flooded with short positions, reflected in the negative funding rate.
But major players—or whales—don’t need to believe Do Kwon will actually get a light five-year sentence. They only need to exploit the uncertainty around the verdict, reverse-pump the price, and target overly crowded shorts.
This may explain why LUNA surged the night before Do Kwon’s sentencing. The market isn’t celebrating justice—it’s speculating on the outcome itself.
With the crypto market otherwise lacking catalysts and broadly sluggish, tomorrow’s hearing has created one of the few pockets of localized volatility.
From Victims to Predators
You’re awake. It’s 2022.
If we pulled up the LUNA holder distribution chart in May 2022, we’d see a far grimmer picture:
Crowded with Korean retail investors who lost their life savings, crypto funds hit hard, and speculators trying to catch a falling knife only to be buried deeper. Back then, trading was driven more by anger, despair, and irrational self-rescue attempts.
Three years later, the market’s microstructure has undergone complete turnover.
The original victims have long since cut losses and exited. Now sitting across the table may be an entirely different set of participants—high-frequency quant teams, event-driven hedge funds (Event-Driven Funds), and speculators专门 hunting “junk assets.”
For these new players, whether Do Kwon is innocent or whether the Terra ecosystem has a future are not only irrelevant but pure noise. The only metric they care about is event beta—the asset’s price sensitivity to specific legal news.
Under such conditions, LUNA’s asset nature has effectively mutated into a legal-event-linked derivative note, much like how certain meme coins rise and fall based solely on a public figure’s actions.
This reflects an extremely brutal form of maturity in crypto markets: death or imprisonment can themselves be “monetized.”
Today’s LUNA trades—even those involving hollow shells—are essentially pricing disaster. Major capital fully understands fundamentals are zero. Yet as long as disagreement exists and room for long-short battles remains, this “empty shell” becomes a perfect trading vehicle.
One could even argue that precisely because there is no fundamental anchor, price movements are unconstrained, driven entirely by emotional release.
Which brings us back to the truth: most crypto tokens are memes at their core.
Pricing Everything
After tomorrow’s verdict, whether Do Kwon hears “5 years” or “12 years,” the outcome for the LUNA trading instrument may ultimately be the same.
Once the event concludes, the token will likely return to being uneventful; not just bad news kills momentum, definitive good news does too.
If sentenced heavily, logic reverts to fundamentals—price goes to zero. If given leniency, the bullish news is priced in, triggering a classic “sell the news” reaction as profit-takers exit en masse.
Honestly, LUNA serves as an excellent mirror.
It once reflected the narrative of algorithmic stablecoins, and now it reveals the market’s highly evolved, cold-blooded side.
Today’s crypto market can efficiently repackage even a dead coin and a convicted founder—with just a shred of news value—into gambling chips on a betting table.
Liquidity efficiency in crypto has evolved to its peak. It can price anything: emotions, bugs, memes… and of course, a man’s freedom and the judgment of justice.
Faced with such extreme efficiency, moral judgment seems somewhat redundant.
Do Kwon may spend the rest of his life sorrowfully behind bars, but the crypto market feels no sorrow—only volatility yet to be priced.
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