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Terraform Administrator Sues Jump Trading for $4 Billion, Alleging Role in Terra’s Collapse

Friday, 19/12/2025 | 16:58 GMT by Jared Kirui
  • The lawsuit centers on allegations of market manipulation, concealment of critical information, and self‑dealing by Jump Trading.
  • A US court sentenced Terraform Labs co-founder Do Kwon to 15 years in prison after he pleaded guilty to multiple charges.
Do Kwon. Source: YouTube, Reuters
Do Kwon. Source: YouTube

The court‑appointed administrator of Terraform Labs has sued Jump Trading, alleging the high‑speed trading firm illegally profited from and helped fuel the Terra ecosystem’s $40 billion collapse.

The complaint, filed in federal court in Illinois, seeks $4 billion in damages from Jump, its co‑founder William DiSomma and former Jump Crypto president Kanav Kariya, the Wall Street Journal reported.

The official winding down what remains of Terraform Labs has launched a high‑stakes lawsuit against Jump Trading, arguing that the Chicago trading firm did not just trade around Terra’s collapse but helped shape it while pulling billions out of the ecosystem.

Allegations of Manipulation

The complaint turns the spotlight back on TerraUSD’s supposedly self-stabilising design and alleges that, behind the marketing , a confidential rescue agreement with Jump kept the stablecoin peg alive and misled investors about how the system really worked.

Todd Snyder, the court‑appointed plan administrator for Terraform Labs, reportedly filed the case in the U.S. District Court for the Northern District of Illinois, seeking $4 billion in damages from Jump Trading LLC, co‑founder William DiSomma and former Jump Crypto president Kanav Kariya.

Recently, US court sentenced Do Kwon, the co-founder of Terraform Labs, to 15 years in prison after he pleaded guilty to wire fraud and conspiracy to defraud investors, following the collapse of the Terra ecosystem that wiped out an estimated $40 billion in investor funds.

Keep reading: Terraform Labs’ Do Kwon Gets 15 Years in Prison in the US

At the core of the complaint is an alleged secret agreement under which Jump committed to support UST’s peg during periods of stress, while also receiving significant benefits in Luna and other tokens.

The administrator claims Jump then used that position to help stabilise UST temporarily, sold large quantities of Luna into a market that believed the system’s algorithm worked as advertised and ultimately exited with billions in gains as ordinary holders were left with near‑worthless tokens.

Terra’s 2022 crash and industry fallout

Terraform Labs’ experiment began to unravel in 2022, when its algorithmic stablecoin TerraUSD slipped its dollar peg and failed to recover, triggering a rapid loss of confidence.

The Terra crisis rippled across a crypto market already under pressure, contributing to a series of failures in leveraged trading venues, lenders and hedge funds. That wave culminated later in 2022 with the collapse of Sam Bankman‑Fried’s FTX exchange, as exposures to Terra‑linked losses and broader market stress undermined balance sheets across the sector.

In a separate track, the Singapore‑based company agreed in 2024 to pay roughly $4.5 billion to the U.S. Securities and Exchange Commission to resolve a civil securities fraud case that focused on misleading disclosures around TerraUSD and related products.

The court‑appointed administrator of Terraform Labs has sued Jump Trading, alleging the high‑speed trading firm illegally profited from and helped fuel the Terra ecosystem’s $40 billion collapse.

The complaint, filed in federal court in Illinois, seeks $4 billion in damages from Jump, its co‑founder William DiSomma and former Jump Crypto president Kanav Kariya, the Wall Street Journal reported.

The official winding down what remains of Terraform Labs has launched a high‑stakes lawsuit against Jump Trading, arguing that the Chicago trading firm did not just trade around Terra’s collapse but helped shape it while pulling billions out of the ecosystem.

Allegations of Manipulation

The complaint turns the spotlight back on TerraUSD’s supposedly self-stabilising design and alleges that, behind the marketing , a confidential rescue agreement with Jump kept the stablecoin peg alive and misled investors about how the system really worked.

Todd Snyder, the court‑appointed plan administrator for Terraform Labs, reportedly filed the case in the U.S. District Court for the Northern District of Illinois, seeking $4 billion in damages from Jump Trading LLC, co‑founder William DiSomma and former Jump Crypto president Kanav Kariya.

Recently, US court sentenced Do Kwon, the co-founder of Terraform Labs, to 15 years in prison after he pleaded guilty to wire fraud and conspiracy to defraud investors, following the collapse of the Terra ecosystem that wiped out an estimated $40 billion in investor funds.

Keep reading: Terraform Labs’ Do Kwon Gets 15 Years in Prison in the US

At the core of the complaint is an alleged secret agreement under which Jump committed to support UST’s peg during periods of stress, while also receiving significant benefits in Luna and other tokens.

The administrator claims Jump then used that position to help stabilise UST temporarily, sold large quantities of Luna into a market that believed the system’s algorithm worked as advertised and ultimately exited with billions in gains as ordinary holders were left with near‑worthless tokens.

Terra’s 2022 crash and industry fallout

Terraform Labs’ experiment began to unravel in 2022, when its algorithmic stablecoin TerraUSD slipped its dollar peg and failed to recover, triggering a rapid loss of confidence.

The Terra crisis rippled across a crypto market already under pressure, contributing to a series of failures in leveraged trading venues, lenders and hedge funds. That wave culminated later in 2022 with the collapse of Sam Bankman‑Fried’s FTX exchange, as exposures to Terra‑linked losses and broader market stress undermined balance sheets across the sector.

In a separate track, the Singapore‑based company agreed in 2024 to pay roughly $4.5 billion to the U.S. Securities and Exchange Commission to resolve a civil securities fraud case that focused on misleading disclosures around TerraUSD and related products.

Topics
Terraform Labs
Do Kwon
About the Author: Jared Kirui
Jared Kirui
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Jared is an experienced financial journalist passionate about all things forex and CFDs.

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