- Terraform’s bankruptcy administrator is suing Jump Trading for $4B in damages.
- The lawsuit alleges manipulation and secret deals tied to the Terra collapse.
- Jump reportedly made about $1B from selling Luna before the crash.
The court-appointed administrator overseeing the fallout from Terraform Labs’ collapse has filed a major lawsuit against Jump Trading, accusing the high-speed trading firm of profiting from — and contributing to — one of crypto’s largest failures. According to a Wall Street Journal report, the suit seeks $4 billion in damages and names Jump Trading, co-founder William DiSomma, and Kanav Kareiya, a former intern who later became the firm’s president. Terraform’s post-bankruptcy X account confirmed the filing on Friday.
Claims of Manipulation and Self-Dealing
Todd Snyder, who is responsible for winding down what remains of the Terraform empire, alleges that Jump Trading engaged in manipulation, concealment, and self-dealing that enriched the firm while devastating investors. In a statement cited in the filing, Snyder said the lawsuit is a necessary step to hold Jump accountable for conduct that he claims directly contributed to the $40 billion collapse. The allegations paint Jump as an active participant rather than a passive market actor.
The Terra Collapse That Shook Crypto
Terraform Labs imploded in 2022 after its algorithmic stablecoin TerraUSD (UST) lost its dollar peg, triggering a rapid and catastrophic market spiral. Within days, the associated Luna token collapsed to near zero, wiping out an estimated $40 billion in value. The fallout affected hundreds of thousands of investors worldwide and sent shockwaves through the industry, accelerating a broader crisis that later culminated in the collapse of FTX.
Alleged Secret Agreement and Massive Profits
According to an Illinois district court filing referenced by the WSJ, the bankruptcy administrator claims Jump Trading had a secret agreement to support UST before its eventual failure. The suit alleges that Jump exited its positions before the collapse, ultimately walking away with billions in gains. Prior SEC filings cited in the report indicate that Jump made roughly $1 billion from selling Luna alone.
Terraform’s Legal Reckoning Continues
Terraform Labs filed for bankruptcy in January 2024 and later agreed to pay approximately $4.5 billion to the U.S. Securities and Exchange Commission to settle a civil securities fraud case. Founder Do Kwon, who launched the project in 2018, pleaded guilty in August to two criminal charges and was sentenced last week to 15 years in prison. The lawsuit against Jump adds another chapter to the long legal aftermath of Terra’s collapse.
