The liquidating entity Terraform Labs has sued Jump Trading, seeking $4 billion in damages, alleging that the company manipulated UST through a secret agreement for personal gain.
The liquidating entity Terraform Labs is suing Jump Trading, seeking $4 billion in damages.
The collapse of the Terra ecosystem continues to leave significant legal repercussions, as the liquidation manager Terraform Labs has officially filed a lawsuit against Jump Trading and its senior executives, demanding $4 billion in damages, alleging that they secretly manipulated TerraUSD before the stablecoin's collapse in 2022.
The Office of the Terraform Labs Plan Administrator has filed a $4B lawsuit against Jump Trading over its direct role in the collapse of Terraform Labs, seeking to hold Jump to account for enriching itself through illicit market manipulation, self-dealing, and misuse of assets.…
— Terra 🌍 Powered by LUNA 🌕 (@terra_money) December 19, 2025
Revisiting the past, targeting Jump Trading.
According to the Wall Street Journal , Todd Snyder – the court-appointed liquidator for Terraform Labs – has filed a lawsuit against Jump Trading, co-founder William DiSomma, and former President Kanav Kariya (who left Jump in 2024).
- In the lawsuit, Snyder alleges that Jump Trading actively exploited the Terra ecosystem through a secret agreement with Terraform Labs to support the price of TerraUSD (UST) in the early stages, thereby creating the illusion of stability for the Algorithmic Stablecoin mechanism before the entire system collapsed.
According to the plaintiffs, this deal helped Jump reap billions of dollars in profits, while investors were misled about the true level of security of UST, Todd Snyder stated, according to the WSJ.
"This is a necessary step to hold Jump Trading accountable for its illegal activities, which directly led to the biggest crypto crash in history."
Jump's Vai was once exposed by the SEC.
However, the allegations in the new lawsuit are not entirely new. Previously, the SEC detailed the secret relationship between Terraform and Jump Trading in its own separate lawsuit filing.
Specifically, according to the SEC, in May 2021, when TerraUSD first lost its USD Peg , Tai Mo Shan, a subsidiary of Jump Trading, purchased $20 million worth of UST to bring the stablecoin's price back to $1; in return, it received unlocked LUNA, which it then sold on the market. Through this, Tai Mo Shan earned a profit of $1.28 billion, while the SEC accused Jump and Terraform of misleading investors about the effectiveness and sustainability of the TerraUSD price stabilization mechanism.
- The case concluded when Tai Mo Shan agreed to a settlement with the SEC, accepting to pay approximately $123 million in fines without admitting or denying the charges.
Jump Trading claims Terraform is shifting blame.
Conversely, Jump Trading was quoted as describing the lawsuit as a desperate attempt to shift responsibility away from Terraform and Do Kwon, and asserting that they would pursue the case to the end to defend their position.
According to the WSJ, to date, approximately $300 million in assets have been recovered to compensate Terraform Labs' creditors, but this figure is still very small compared to the scale of the damage caused by the Terra case.
Terra 2022 disaster: Over $40 billion "vanished".
- Terraform Labs, under the leadership of Do Kwon , was once one of the largest ecosystems in the crypto market. However, in 2022, the Algorithmic Stablecoin TerraUSD unexpectedly lost its USD Peg , dragging the LUNA Token into a downward spiral.
- In a short period of time, over $40 billion in market value was wiped out, triggering a series of bankruptcies in the crypto market at that time.
- After numerous unsuccessful restructuring attempts, Terraform Labs filed for bankruptcy in 2024, reaching an agreement with the U.S. Securities and Exchange Commission (SEC) to pay $4.47 billion in fines and civil damages.
- Personally, Do Kwon pleaded guilty to two criminal charges in August and was sentenced to 15 years in prison in the U.S. last week.
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