The court-appointed administrator overseeing the liquidation of Terraform Labs’ remaining assets has filed a lawsuit against Jump Trading, accusing the high-frequency trading firm of unjust enrichment and of playing a central role in the collapse of the Terra ecosystem.
The lawsuit seeks $4 billion in damages and was filed in the U.S. District Court for the Northern District of Illinois, Eastern Division, according to a report by The Wall Street Journal. The case was brought by Todd Snyder, who was appointed to administer Terraform Labs’ bankruptcy plan.
Jump Trading, its co-founder William DiSomma, and former Jump Crypto president Kanav Kariya are named as defendants.
Alleged secret agreements and discounted Luna purchases
According to the complaint, Jump entered into a series of undisclosed agreements with Terraform Labs beginning in 2019. These arrangements allegedly allowed Jump to purchase millions of Luna tokens at prices far below prevailing market rates.
In one cited agreement, Jump reportedly received the right to buy Luna at $0.40 per token. At later points, Luna’s market price exceeded $110. The administrator claims these transactions generated billions of dollars in profits for Jump.
The lawsuit also describes what it calls a “gentlemen’s agreement” under which Jump allegedly committed to supporting the TerraUSD (UST) peg to the U.S. dollar. The filing claims the agreement was intentionally kept secret to avoid regulatory scrutiny.
In May 2021, TerraUSD briefly lost its dollar peg before rapidly recovering. The lawsuit asserts that the rebound was not the result of Terraform’s algorithmic mechanism, as publicly claimed, but instead stemmed from large-scale UST purchases made by Jump.
Following the recovery, the complaint alleges that Jump and Terraform falsely represented the event as proof that the algorithm worked as designed.
Vesting changes and market sales
After identifying weaknesses in TerraUSD’s structure, Jump allegedly negotiated the removal of vesting restrictions on its Luna holdings. This change allowed the firm to regularly receive and sell tokens on the open market without traditional lockup periods, according to the filing.
After the initial depeg, the Luna Foundation Guard was established to defend UST using reserves of Bitcoin and other digital assets. The lawsuit claims that during the final collapse in May 2022, the foundation transferred nearly 50,000 BTC to Jump without a written agreement governing their use.
The administrator alleges that these actions were effectively directed by Terraform co-founder Do Kwon and Kanav Kariya.
The lawsuit also claims DiSomma contacted executives at other crypto trading firms to seek emergency funding for Terra. According to the filing, some recipients of that information instead traded against UST and Luna, accelerating the collapse.
In a statement included in the filing, Snyder said Jump “actively exploited the Terraform Labs ecosystem through manipulation, concealment, and self-enrichment,” while thousands of investors suffered losses.
Jump denies allegations as blame-shifting
Jump Trading denied the claims, calling the lawsuit an attempt to deflect responsibility from Terraform and its founder.
“This is a desperate attempt by Terraform Labs to shift blame and financial responsibility for the crimes committed by Do Kwon,” a company spokesperson said, adding that Jump would “vigorously defend” against the allegations.
In December 2024, Jump’s Tai Mo Shan affiliate agreed to pay $123 million to settle a U.S. regulatory investigation related to its dealings with Terraform in 2021.
Separately, Do Kwon pleaded guilty in August 2025 to two counts of conspiracy to commit wire fraud and wire fraud. In December 2025, a U.S. federal court sentenced him to 15 years in prison, citing deliberate deception of investors and losses estimated at roughly $40 billion.
Source: https://coinpaper.com/13243/terraform-labs-administrator-files-4-b-lawsuit-against-jump-trading-over-terra-usd-crash
