The Terra ecosystem token suffered a blow on December 14, with LUNA dropping 12.5% to $0.1704 and USTC also falling 12.5% to $0.007672. The 24-hour trading volume reached $171 million and $20.38 million respectively, far exceeding usual levels. The direct trigger for the crash was the sentencing hearing of founder Do Kwon, held on December 11, where prosecutors requested a 12-year prison sentence. This news rekindled the market's painful memories of the 2022 Terra collapse event.

Do Kwon's legal troubles have a long history. In May 2022, the Terra ecosystem's algorithmic stablecoin UST depegged, triggering a chain reaction that caused the price of LUNA to plummet from $119 to nearly zero. The entire ecosystem's market value evaporated by over $40 billion, leaving hundreds of thousands of investors with nothing. Subsequently, Do Kwon fled and was arrested in Montenegro, with extradition procedures ongoing. This sentencing hearing is a critical juncture for him to face legal consequences. If sentenced to 12 years, it will have far-reaching warning effects on the entire cryptocurrency industry.

The price of LUNA dropped by 21.8% in a single day on December 7, when market rumors surfaced that Do Kwon would soon be extradited back to South Korea. Investors were concerned that liquidation and compensation processes would lead to further selling pressure. Although Terra restarted its blockchain post-collapse and issued new LUNA tokens, market confidence has not been restored. The market value of new LUNA is only a fraction of its peak during the old chain.

USTC, as the legacy asset of the original UST stablecoin, also has a dismal price trend. Theoretically, stablecoins should peg to $1, but USTC is currently worth only $0.007672, over 99% away from its pegged price, resulting in almost complete losses for holders. Some investors still hold onto fantasies, hoping for some miraculous recovery mechanism, but the reality is that the fundamental flaws in the algorithmic stablecoin model have been proven insurmountable.

Exchanges' attitudes towards the Terra ecosystem are increasingly cold. OKX will delist USTC in September 2025. Although Binance retains trading pairs, it only supports USDT and TRY pairs, with extremely poor liquidity. Many mainstream exchanges delisted LUNA and UST as early as 2022, with only a few second-tier platforms still providing trading services. This isolated status further exacerbates downward price pressure.

Despite this, LUNA and USTC still have perpetual contract trading on some exchanges. Platforms like Binance, Bitget, Bybit, and Hyperliquid offer short-selling tools. Some speculators attempt to amplify profits through contracts, but such high-risk operations are prone to liquidation. 24-hour liquidation data shows millions of dollars were forcibly liquidated, indicating the market remains highly volatile.