The court‑appointed administrator of Terraform Labs has sued Jump Trading, alleging the high‑speed trading firm illegally profited from and helped fuel the Terra ecosystem’s $40 billion collapse.
The complaint, filed in federal court in Illinois, seeks $4 billion in damages from Jump, its co‑founder William DiSomma and former Jump Crypto president Kanav Kariya, the Wall Street Journal reported.
The official winding down what remains of Terraform Labs has launched a high‑stakes lawsuit against Jump Trading, arguing that the Chicago trading firm did not just trade around Terra’s collapse but helped shape it while pulling billions out of the ecosystem.
Allegations of Manipulation
The complaint turns the spotlight back on TerraUSD’s supposedly self-stabilising design and alleges that, behind the marketing Marketing Marketing is defined as the business process of identifying, anticipating and satisfying customers' needs and wants.This is a crucial element of any operation or brokerage in the financial services space. Well-funded marketing campaigns are instrumental to the survival and longevity of these companies in an increasingly competitive industry.Within the forex space, marketers perform a wide range of functions to help procure, secure, or retain clients.In particular, newer forex brokers also have t Marketing is defined as the business process of identifying, anticipating and satisfying customers' needs and wants.This is a crucial element of any operation or brokerage in the financial services space. Well-funded marketing campaigns are instrumental to the survival and longevity of these companies in an increasingly competitive industry.Within the forex space, marketers perform a wide range of functions to help procure, secure, or retain clients.In particular, newer forex brokers also have t Read this Term, a confidential rescue agreement with Jump kept the stablecoin Stablecoin Unlike other cryptocurrencies like Bitcoin and Ethereum, stablecoins are cryptocurrencies that have been designed to keep a stable value. Placing a greater emphasis on stability over volatility can be a huge draw for some investors. Many individuals can be turned off from large swings and uncertainty presented by cryptos relative to other traditional assets.Stablecoins control for this volatility by being pegged to another cryptocurrency, fiat money, or to exchange-traded commodities, including Unlike other cryptocurrencies like Bitcoin and Ethereum, stablecoins are cryptocurrencies that have been designed to keep a stable value. Placing a greater emphasis on stability over volatility can be a huge draw for some investors. Many individuals can be turned off from large swings and uncertainty presented by cryptos relative to other traditional assets.Stablecoins control for this volatility by being pegged to another cryptocurrency, fiat money, or to exchange-traded commodities, including Read this Term peg alive and misled investors about how the system really worked.
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Todd Snyder, the court‑appointed plan administrator for Terraform Labs, reportedly filed the case in the U.S. District Court for the Northern District of Illinois, seeking $4 billion in damages from Jump Trading LLC, co‑founder William DiSomma and former Jump Crypto president Kanav Kariya.
Recently, US court sentenced Do Kwon, the co-founder of Terraform Labs, to 15 years in prison after he pleaded guilty to wire fraud and conspiracy to defraud investors, following the collapse of the Terra ecosystem that wiped out an estimated $40 billion in investor funds.
Keep reading: Terraform Labs’ Do Kwon Gets 15 Years in Prison in the US
At the core of the complaint is an alleged secret agreement under which Jump committed to support UST’s peg during periods of stress, while also receiving significant benefits in Luna and other tokens.
The administrator claims Jump then used that position to help stabilise UST temporarily, sold large quantities of Luna into a market that believed the system’s algorithm worked as advertised and ultimately exited with billions in gains as ordinary holders were left with near‑worthless tokens.
Terra’s 2022 crash and industry fallout
Terraform Labs’ experiment began to unravel in 2022, when its algorithmic stablecoin TerraUSD slipped its dollar peg and failed to recover, triggering a rapid loss of confidence.
The Terra crisis rippled across a crypto market already under pressure, contributing to a series of failures in leveraged trading venues, lenders and hedge funds. That wave culminated later in 2022 with the collapse of Sam Bankman‑Fried’s FTX exchange, as exposures to Terra‑linked losses and broader market stress undermined balance sheets across the sector.
In a separate track, the Singapore‑based company agreed in 2024 to pay roughly $4.5 billion to the U.S. Securities and Exchange Commission to resolve a civil securities fraud case that focused on misleading disclosures around TerraUSD and related products.
