Chiara Bianchi
The court-appointed administrator managing Terraform Labs’ liquidation has filed a major lawsuit against Jump Trading and two of its senior leaders, aiming to recover $4 billion in damages tied to the catastrophic implosion of the Terra ecosystem in 2022.
According to reporting from The Wall Street Journal, plan administrator Todd Snyder is seeking to hold Jump Trading, co-founder William DiSomma, and former president Kanav Kariya financially responsible for their alleged role in the collapse. Terraform later confirmed the lawsuit publicly.
Terraform Labs, founded by Do Kwon, unraveled in 2022 after its algorithmic stablecoin TerraUSD (UST) lost its dollar peg. The failure triggered a rapid collapse of LUNA, erasing more than $40 billion in market value and igniting a chain reaction of insolvencies across the crypto lending sector.
After failed efforts to reboot the ecosystem, Terraform filed for bankruptcy in 2024. As part of the aftermath, the company agreed to pay $4.47 billion in penalties to the U.S. Securities and Exchange Commission. More recently, Do Kwon was sentenced to 15 years in U.S. prison after pleading guilty to criminal charges earlier this year.
Allegations of a Secret Deal to Prop Up TerraUSD
Snyder alleges that Jump “actively exploited” the Terraform ecosystem by engaging in a non-public arrangement designed to artificially support TerraUSD before its eventual collapse. The lawsuit claims that this agreement allowed Jump to generate billions of dollars in profits while masking structural flaws in the stablecoin’s design.
“This lawsuit is a critical step toward holding Jump Trading accountable for conduct that directly contributed to the largest collapse in crypto history,” Snyder said, according to the report.
SEC Findings Reinforce Administrator’s Claims
The allegations echo earlier conclusions reached by the SEC, which detailed undisclosed dealings between Terraform Labs and Jump’s crypto arm, Tai Mo Shan.
Regulators previously stated that Tai Mo Shan purchased $20 million worth of UST in May 2021 after the stablecoin briefly depegged. In return, the firm allegedly received early access to unlocked LUNA tokens, which were later sold into the market.
The SEC argued that this arrangement misled investors about the stability of UST’s algorithmic mechanism. According to the agency, Tai Mo Shan earned approximately $1.28 billion from the deal before agreeing to pay $123 million in penalties to settle the charges.
Jump Pushes Back as Asset Recovery Continues
A spokesperson for Jump reportedly dismissed the lawsuit as a “desperate attempt” to deflect responsibility from Terraform and Do Kwon, stating that the firm intends to vigorously contest the claims in court.
So far, roughly $300 million in assets have been recovered to compensate creditors, though that figure remains far below the total losses incurred during the Terra collapse.
Requests for comment have been sent to Terraform Labs, Jump Trading, and Kanav Kariya, according to the report.
