On the eve of Do Kwon's trial, $1.8 billion is being wagered on his sentence.

Written by: David, Deep Tide TechFlow

As of the evening of December 10th, you might not have noticed, but the contract data for the LUNA token is quite outrageous.

Without any technological upgrades or positive ecosystem news, the total 24-hour trading volume of the LUNA series contracts (including LUNA and LUNA2) across the entire market has approached $1.8 billion.

And LUNA itself has also risen by 150% in the past week.

For comparison, the combined trading volume of LUNA and LUNA2 now ranks roughly in the top ten of the entire market's contract trading volume, second only to HYPE's $1.88 billion.

The funding rates for the two are -0.0595% and -0.0789%, respectively.

High negative fees mean the market is not only crowded but also in a state of extreme divergence: a large amount of capital is shorting, while another, even larger amount of capital is using this crowding to create a short squeeze. We all know LUNA has no fundamentals left. This $1.8 billion in liquidity is essentially trading a bet that's about to be revealed: Tomorrow, December 11th at 24:00, the former "King of Stablecoins," Do Kwon, will have his final sentencing hearing in Courtroom 1305 of the Southern District of New York. The market is betting real money on the sentence of this former crypto tycoon.

Sentences can be long or short, speculation never stops

To understand this $1.8 billion contract trading volume, we need to look at the current progress of this case.

For most people, the name Do Kwon has faded from view since the epic crash of 2022.

But in fact, this former crypto tycoon was extradited to New York in late 2024. And in August of this year, he formally pleaded guilty in Manhattan federal court to multiple charges, including securities fraud.

Tomorrow's hearing is not a debate about "guilt or innocence," but a final verdict on the length of his sentence.

According to the latest court documents, there is a significant gap between the prosecution and the defense in their sentencing recommendations: The prosecution is advocating for 12 years in prison. The U.S. Attorney's Office is taking a hard line, citing the billions of dollars lost due to the Terra crash and Do Kwon's fraudulent activities regarding the "fake on-chain" of the Chai payment app before the crash. From the market's perspective, 12 years represents a complete end. Based on the four-year cycle of cryptocurrencies, three cycles would be irrelevant to Do Kwon. The defense is requesting 5 years in prison. The defense team is playing the "sympathy card," emphasizing that Do Kwon has already been detained in Montenegro for some time, has a good attitude towards admitting guilt, and has cooperated with the SEC in enforcing fines. The seven-year gap is actually enough time for intraday speculation and capital games surrounding the LUNA token. The normal logic is that with the founder receiving a severe sentence, the LUNA token is definitely one step closer to zero. Therefore, the market is flooded with short sellers, and we've seen negative funding rates. However, major funds, or market makers, don't actually need to believe that Do Kwon will really be sentenced to only five years. They only need to exploit the uncertainty of this verdict to drive up the price and selectively hunt down those overly crowded short sellers. This might explain why LUNA surged on the eve of Do Kwon's trial. The market wasn't celebrating justice, but rather speculating on the verdict itself. The crypto market was already lacking in hot topics and generally weak; tomorrow's hearing only created a few isolated instances of volatility. From Victim to Predator: Wake up, it's 2022. If we looked at LUNA's holdings distribution chart in May 2022, we would see an even more bleak picture: it would be crowded with South Korean retail investors who lost their life savings, devastated crypto funds, and speculators who tried to buy the dip but were buried. Back then, trading was filled with anger, despair, and irrational self-preservation. Three years later, the market's microstructure has undergone a complete overhaul. The victims of that time have long since cut their losses and left the game. Sitting across the table now are perhaps a completely different group of participants. For example, high-frequency quantitative teams, event-driven hedge funds, and speculators who specialize in hunting "junk assets." For these new players, whether Do Kwon is innocent or whether the Terra ecosystem has a future is not only unimportant, but even noise. The only metric they care about is event beta, the sensitivity of asset prices to specific legal news. In this situation, LUNA's asset attributes have essentially been distorted into a legally-driven derivative instrument, much like how the fluctuations of certain meme coins revolve around the actions of a public figure. This is an extremely brutal maturation in the crypto market; **death or imprisonment** can itself be "monetized." The current trading of LUNA, and even many other tokens that are merely shells, is essentially a disaster pricing strategy. Major investors are well aware that the fundamentals have become worthless. But as long as disagreements exist, as long as there is room for bullish and bearish maneuvering, this "empty shell" is the perfect trading target. It could even be said that precisely because there is no fundamental anchor, the token price fluctuations are no longer constrained, entirely dependent on the venting of emotions. This also confirms the saying that most tokens in the crypto market are actually memes.

Pricing Everything

After tomorrow's verdict, whether Do Kwon hears "5 years" or "12 years," the outcome for LUNA, the underlying asset, will likely be the same.

After the event, the token will most likely become stagnant again; not only bad news kills the market, but **definite good news** can too.

If it's a heavy sentence, the logic returns to fundamentals, and the price goes to zero; if it's a lenient sentence, the good news is already priced in, it's "Sell the News," and profit-taking will recede like a tide.

To be honest, LUNA is actually a very good lens through which to observe the market.

It has revealed the technological narrative of algorithmic stablecoins, and it has also revealed the extremely mature and extremely cold-blooded side of this market.

In today's crypto market, even a dead coin and a founder who has confessed can be efficiently repackaged into chips on the gambling table as long as there is even a sliver of news value.

The liquidity efficiency of the crypto market has evolved to the extreme; it can price anything: emotions, bugs, memes... and of course, an individual's freedom and a just trial.

The liquidity efficiency of the crypto market has evolved to the extreme; it can price anything: emotions, bugs, memes... and of course, an individual's freedom and a just trial.

Faced with such extreme efficiency, moral judgment seems somewhat superfluous. Do Kwon may spend the rest of his life in prison in sorrow, but the crypto market holds no sorrow, only volatility yet to be priced in.