Terra's LUNA and LUNC tokens teeter on the brink as founder Do Kwon considers a plea bargain in the $40 billion Terraform Labs case.
In a significant development, Do Kwon, the founder of Terraform Labs, has admitted guilt in the U.S. over conspiracy to commit fraud and one count of fraud related to the collapse of the Terra ecosystem in 2022. The collapse, which resulted in an estimated $40 billion loss, involved the demise of Terra's algorithmic stablecoin TerraUSD (UST) and its counterpart token LUNA.
The charges stem from the collapse of Terra's stablecoin, TerraUSD (UST), and its token LUNA, which lost nearly $50 billion in value when UST lost its peg, causing cascading losses worldwide. Kwon was initially indicted on nine counts including fraud and money laundering conspiracy. He was arrested in Europe in 2023 traveling on a fake passport and was prosecuted in the Southern District of New York federal court.
Kwon's guilty plea marks a major resolution in one of the largest cryptocurrency fraud cases, highlighting the U.S. authorities' push to hold crypto project founders accountable. The Terra blockchain persists in the form of Terra Classic and a forked blockchain named Terra. Terra had launched various crypto products such as Mirror (a synthetic exchange) and Anchor (offering 19% interest on UST deposits), which attracted significant investment but contributed to systemic risk.
The case's current status is that Do Kwon has admitted guilt on key fraud charges and is subject to sentencing and asset forfeiture under U.S. law. He faces up to 25 years in prison and has agreed to forfeit over $19 million and his interest in Terraform Labs and its cryptocurrencies.
Meanwhile, the price of LUNA has been consolidating between $0.148 and $0.169 over the past week. The RSI for LUNA is at 44.75, indicating neutral momentum. If the price of LUNC breaks above $0.00006417, $0.00007000 could be reached. The 7-day range for LUNC is $0.00005686 to $0.00006417. The RSI for LUNC is at 46.37, suggesting a modest recovery from oversold territory.
Trading volume for LUNA has increased 39.50% over the past day, while open interest has decreased 6.16%. LUNC is trading at $0.00006116, close to its 20-day moving average of $0.00006060 and just below the upper Bollinger Band resistance of $0.00006464. LUNA is trading at $0.1602, above the 20-day moving average of $0.1612 but below the upper Bollinger Band resistance of $0.1761.
A decline toward $0.148 could occur if the $0.158 support is not maintained for LUNA. On the other hand, a sustained break above $0.169 could target $0.176 and $0.190 for LUNA.
In a separate development, Korea's Supreme Court has ruled that TerraUSD and LUNA are not considered financial investment products. This ruling may have implications for the legal status of such digital assets in Korea.
[1] The New York Times [2] CoinDesk [3] Bloomberg [4] Reuters
- The guilty plea by Do Kwon, founder of Terraform Labs, has led to a significant resolution in one of the largest cryptocurrency fraud cases, making headlines across various crypto and general-news platforms, such as The New York Times, CoinDesk, Bloomberg, and Reuters.
- The Terra ecosystem, comprising tokens like TerraUSD (UST) and LUNA, collapsed in 2022, resulting in an estimated $40 billion loss, and Kwon was initially indicted on multiple charges including fraud and money laundering conspiracy. The case is now progressing with sentencing and asset forfeiture proceedings under U.S. law.
- In addition to the fraud case, Korea's Supreme Court has ruled that TerraUSD and LUNA are not considered financial investment products, which could potentially influence the legal status of such digital assets within the region.
- Following the legal developments and Kwon's guilty plea, investors may be closely watching the market trends of the respective tokens, with LUNA's price consolidating between certain levels and exhibiting neutral-to-modest momentum as per technical analysis indicators.
