Terraform Labs court-appointed plan administrator filed a $4 billion lawsuit against Jump Trading on Thursday, accusing the Chicago-based trading firm of secretly manipulating TerraUSD and profiting from the 2022 collapse. Todd Snyder, who manages the bankruptcy estate, named Jump Trading, co-founder William DiSomma and former Jump Crypto president Kanav Kariya as defendants in the U.S. District Court for the Northern District of Illinois.
The complaint alleges Jump earned approximately $1 billion by selling Luna tokens acquired through confidential agreements with Terraform while publicly portraying itself as a neutral market participant.
What Happened: Secret Dealings
The lawsuit claims Jump entered into undisclosed agreements with Terraform as early as 2019.
These arrangements allegedly allowed the trading firm to purchase millions of Luna tokens at 40 cents per coin (the cryptocurrency later traded above $110).
The complaint describes a May 2021 incident when TerraUSD briefly lost its dollar peg. Jump allegedly intervened by purchasing large quantities of the stablecoin to restore the peg, then publicly credited Terraform's algorithm for the recovery. The lawsuit characterizes this as concealment designed to avoid regulatory scrutiny.
Jump later renegotiated contracts to remove vesting restrictions, enabling the firm to sell Luna tokens freely on the open market, according to the filing.
During Terra's final collapse in May 2022, the complaint alleges nearly 50,000 Bitcoin were transferred from the Luna Foundation Guard to Jump without written agreement.
Snyder said Jump "actively exploited the Terraform Labs ecosystem through manipulation, concealment, and self-dealing."
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Why It Matters: Accountability Questions
The lawsuit seeks to establish legal boundaries between legitimate market making and market manipulation in cryptocurrency markets. Terra's collapse wiped out approximately $40 billion in market value and triggered cascading failures across the crypto lending industry in 2022.
A Jump spokeswoman denied the allegations, calling the lawsuit "a desperate attempt by Terraform Labs to shift blame and financial responsibility away from the crimes that Do Kwon committed."
The trading firm plans to defend against what it termed "baseless claims."
Do Kwon received a 15-year prison sentence last week after pleading guilty to fraud charges.
Terraform Labs filed for bankruptcy in January 2024 and agreed to pay approximately $4.5 billion to settle with the Securities and Exchange Commission. Jump's subsidiary Tai Mo Shan settled separate SEC charges for $123 million in December 2024 related to misleading statements about TerraUSD's stability.
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