"Investors Who Held Terra or Luna After May 12, 2022 Are Not Entitled to Compensation"

Published 18 Mar.2026 15:40(KST)

Singapore Court of Appeal Rules

"Holding After Fraud Awareness Is Speculation

Higher Damages for Investors Who Sold"

A court has ruled that if an investor continued to hold coins and suffered losses even after becoming aware of fraud, they are not entitled to compensation. On March 6, the Singapore Court of Appeal (Presiding Judge Steven Chong), in a lawsuit filed by investors against Terraform Labs and Do Kwon in connection with the so-called "Terra-Luna crash," held that damages cannot be recognized for those who are "the author of his/her own misfortune."

This clarifies the original judgment, which dismissed compensation claims on the grounds that holding coins after the crash intensified on May 12, 2022, without disposing of them, was considered "speculation" rather than fraud-related damages.

The appellate court also recognized a time gap between when investors became aware of the fraud and when the actual sell-off drove prices down. For investors who recognized the fraud and sold, the court increased the damages awarded compared to the initial ruling, acknowledging the reality that even those trying to sell after learning of the fraud faced a rapid drop in prices due to mass selling.

Cover capture of the Singapore Court of Appeal judgment. The Legal Times

Court of Appeal Raises Damages Amount

The court lowered the "cut-off price," regarded as the price at which investors who recognized the fraud collectively sold their remaining UST (Terra USD), from $0.8011 per token to $0.60485 per token.

This figure represents the average of the opening and closing prices on May 12, 2022. The first-instance court had used the opening price of $0.8011 as the reference. On May 12, 2022, UST exhibited extreme volatility, fluctuating between a high of $0.829 and a low of $0.3626.

Since the damages are calculated based on the difference between the "actual purchase price" and the "cut-off price" at which coins are deemed sold, a lower cut-off price results in higher damages for the plaintiffs.

With the lower cut-off price used for loss calculations, the total damages awarded to the 10 "representative claimants" who filed the lawsuit on behalf of all 366 investors increased from approximately $451,000 to about $681,600.

"Binding Only on the 10 Representative Claimants"

The appellate court set the cut-off time, by Coordinated Universal Time (UTC), as 12:01 a.m. on May 12. Holding UST beyond this point was deemed a voluntary assumption of risk, i.e., "speculation." Therefore, losses after this point could not be claimed as fraud-related damages.

After the Terra-Luna crash, Do Kwon posted a message on Twitter on May 11, 2022, implying the situation could be resolved. The appellate court noted that any reasonable investor who saw this would have realized that UST was no longer safe. The court wrote, "Do Kwon's tweet signaled to any reasonable investor that the dollar peg would not be restored," and that it established the cut-off date after providing a 14-hour grace period to allow investors time to assess the situation and respond appropriately.

The court stated, "Failing to dispose of UST during this period means the investor lacked 'a reasonable degree of prudence and common sense' and must be considered, in legal terms, as 'the author of his/her own misfortune.' During the 14-hour grace period, a prudent and reasonable investor would have ceased additional purchases and disposed of all existing UST to protect their assets from further decline in value."

However, the court also made it clear that the cut-off date established in this ruling is binding only on the 10 representative claimants. For the remaining 356 individual claimants whose cases have not yet been individually reviewed, the court said it would examine evidence of their individual circumstances in future proceedings, leaving open the possibility that a different cut-off date after May 12 could be applied.

Attorney Mimi An, partner at Singapore law firm Focus Law Asia LLC, explained, "This appellate decision set a cut-off date to determine up to when investors could be considered as holding UST, and also adjusted the reference price to separately increase the assessed damages. Depending on which country Do Kwon's assets are located in, an enforcement judgment may be issued by a Korean court after approval."

The "Terra-Luna Crash" Explained...

The "Terra-Luna crash" refers to the collapse of the prices of the cryptocurrency "Terra," issued by Terraform Labs, co-founded by Do Kwon in 2019, and its auxiliary coin "Luna," starting in May 2022, which caused massive losses to investors worldwide. Although Do Kwon promoted Terra as a "stablecoin" that would remain pegged to the U.S. dollar, it was revealed that such a structure could not be maintained. Previously, in December 2025, a U.S. court found Do Kwon guilty of fraud and other charges and sentenced him to 15 years in prison.