Terraform Labs’ Administrator Sues Jump Trading for $4 Billion

• Terraform wind-down administrator files $4 billion lawsuit against Jump Trading.
• Jump accused of profiting while Terra ecosystem was becoming unstable.
• Lawsuit names Jump co-founder William DiSomma and ex-crypto head Kanav Kariya.

The court-appointed bankruptcy administrator handling the shutdown of Terraform Labs has filed a lawsuit against trading firm Jump Trading, accusing it of playing a role in the downfall of the Terra crypto ecosystem and is seeking $4 billion in damages.

As reported by WSJ, the complaint alleges that Jump and two of its senior figures, co-founder William DiSomma and former crypto chief Kanav Kariya, improperly profited from their involvement with Terraform while the project was unraveling. 

The administrator said the lawsuit is intended to recover funds for creditors left with big losses after the collapse.

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Alleged Role of Jump Trading

According to the filing, Jump maintained extensive trading activity within the Terra ecosystem and continued to benefit financially even as warning signs mounted. The administrator claims the firm engaged in conduct that helped sustain the project artificially, allowing it to generate profits while risk was transferred to ordinary investors.

Terraform Labs, created by Do Kwon, collapsed in May 2022 when its algorithmic stablecoin TerraUSD lost its peg to the U.S. dollar. The breakdown erased roughly $40 billion in value and sent shockwaves across global crypto markets.

Prosecutors later said TerraUSD was marketed as a stable product despite being supported by fragile financial arrangements that failed once market confidence broke.

Wider Legal Consequences

The lawsuit follows the recent sentencing of Do Kwon to 15 years in prison in the United States after he admitted to fraud charges tied to the Terra collapse. At sentencing, the judge rejected lighter penalty requests and said the scale of harm was exceptional, estimating that up to one million people worldwide were affected.

Jump Trading has not yet commented publicly on the claims. The case adds to the ongoing legal fallout from one of the most damaging failures in cryptocurrency history, as courts continue to examine how major firms interacted with the Terra project during its rise and collapse.

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