According to The Wall Street Journal , Todd Snyder, the bankruptcy administrator for Terraform Labs (a cryptocurrency company founded by Do Kwon), has filed a lawsuit in the U.S. District Court for the Southern District of Illinois against high-frequency trading firm and cryptocurrency market maker Jump Trading and its executives, including co-founder William DiSomma and former head of the crypto division Kanav Kariya, seeking damages of up to $4 billion.
Jump Trading accused of being responsible for the LUNA crash
In his lawsuit, Todd Snyder alleges that Jump Trading entered into a secret agreement with Terraform Labs starting in 2019 to purchase large quantities of LUNA tokens at a very low discount. In exchange, Jump secretly bought large amounts of UST in May 2021 to maintain its 1:1 peg to the US dollar when TerraUSD (UST) was first depegged, while Terraform claimed that this was an automatic restoration of the peg, thus misleading investors into believing that the Terra system was highly stable.
The lawsuit further alleges that Jump Trading subsequently demanded the lifting of token lock-up restrictions and quickly sold LUNA, profiting billions of dollars. When Terra ultimately collapsed in May 2022, the Luna Foundation Guard (LFG) transferred approximately $1.5 billion worth of Bitcoin to Jump without a formal written agreement, allegedly enriching itself and exacerbating the collapse's damage.
Snyder emphasized that Jump Trading deeply exploited the Terraform ecosystem through market manipulation, information concealment, and self-enrichment, enriching itself while causing huge losses to thousands of investors, which directly led to the largest cryptocurrency crash in history.
Terra's ecosystem evaporates $40 billion
This lawsuit is the latest development in the legal action following the Terra crash. Terraform Labs' algorithmic stablecoin UST lost its peg in May 2022, causing its sister token LUNA to plummet to near zero. The entire ecosystem lost approximately $40 billion in market value, wiping out the funds of hundreds of thousands of investors worldwide and triggering a chain reaction of collapses in the crypto industry, including the collapse of the FTX exchange in November of the same year.
Terraform Labs filed for bankruptcy in January 2024 and settled with the U.S. Securities and Exchange Commission (SEC), paying approximately $4.5 billion in fines. Founder Do Kwon pleaded guilty to two criminal charges in August 2025 and was sentenced to 15 years in prison last week.
