The legal fallout from the catastrophic collapse of the Terra ecosystem in May 2022 has intensified with a massive new lawsuit. The court-appointed administrator overseeing Terraform Labs' bankruptcy, Todd Snyder, has filed a $4 billion complaint in U.S. federal court against Jump Trading LLC and two of its senior figures: co-founder William DiSomma and former Jump Crypto president Kanav Kariya.
The lawsuit, filed in the U.S. District Court for the Northern District of Illinois, alleges that Jump Trading engaged in secretive, manipulative conduct that was crucial to both sustaining and ultimately profiting from the Terra ecosystem before its implosion. The complaint claims Jump entered into undisclosed agreements with Terraform Labs founder Do Kwon as early as 2019, allowing the firm to purchase significant quantities of LUNA tokens at steep discounts while publicly presenting itself as a neutral market participant.
A central allegation involves Jump's role during a TerraUSD (UST) de-pegging event in May 2021. The lawsuit states that Jump discreetly intervened by buying massive amounts of tokens to restore the stablecoin's dollar peg. Publicly, however, the recovery was credited to Terra's algorithmic design, a deception that allegedly strengthened investor trust and helped Terraform avoid regulatory scrutiny.
The complaint further alleges that Jump later secured the removal of vesting restrictions on its LUNA holdings, enabling rapid sales at significantly higher prices. These transactions are described as generating profits approaching $1 billion. During Terra's final collapse in May 2022, the lawsuit claims nearly 50,000 bitcoin were transferred from the Luna Foundation Guard to Jump without a formal agreement, adding to accusations of self-dealing.
Todd Snyder's filing characterizes Jump's conduct as manipulation and concealment that enriched the firm while accelerating losses for investors. The Terra ecosystem's collapse erased an estimated $40 billion in market value and triggered a broader chain reaction across the cryptocurrency market. Jump Trading has not yet publicly responded to the lawsuit. DiSomma and Kariya have previously invoked their Fifth Amendment rights in related investigations.
This case adds to a growing list of legal actions tied to Terra. In December 2024, a Jump subsidiary agreed to pay $123 million to settle SEC charges related to misleading statements about TerraUSD's stability. Terraform Labs itself reached a roughly $4.5 billion settlement with U.S. regulators, largely addressed through bankruptcy proceedings, while Do Kwon was recently sentenced to 15 years on fraud charges.
If the case proceeds, the discovery process could surface internal communications and trading records that fundamentally reshape the understanding of Terra's collapse and the role of major trading firms within it.
