On December 19th, the liquidation management unit of Terraform Labs officially filed a lawsuit against Jump Trading and several senior executives, seeking up to $4 billion in damages. The lawsuit alleges that Jump Trading secretly manipulated TerraUSD (UST) during its early stages of operation, creating the illusion of a stable Algorithmic Stablecoin before the entire system collapsed catastrophically in 2022, causing tens of billions of dollars in losses to investors worldwide.
According to leaked documents, Todd Snyder, the court-appointed liquidator for Terraform Labs, filed a lawsuit against Jump Trading, co-founder William DiSomma, and former President Kanav Kariya, who left the company in 2024. The lawsuit alleges that Jump Trading was not merely a conventional market maker, but also played a central Vai in "supporting" the price of TerraUSD through a secret agreement with Terraform Labs. Specifically, Jump is accused of buying UST whenever the stablecoin showed signs of losing Peg, thereby leading the market to believe that Terra 's algorithmic price stabilization mechanism was effective and sustainable, while in reality systemic risks had accumulated early on.
According to the plaintiffs' argument, this covert manipulation allowed Jump Trading to reap enormous profits, amounting to billions of dollars, while individual and institutional investors were misled about the true security of UST. Todd Snyder emphasized that this was a necessary step to hold Jump Trading accountable for its alleged illegal actions, which are XEM one of the direct causes of the biggest collapse in crypto market history.
In fact, Jump Trading's Vai in the Terra ecosystem had previously been exposed by US regulators. In a separate lawsuit, the US Securities and Exchange Commission (SEC) detailed the secretive relationship between Terraform Labs and Jump Trading. According to the SEC, in May 2021, when TerraUSD first lost Peg anchor point above $1, Tai Mo Shan – a subsidiary of Jump Trading – purchased approximately $20 million worth of UST to bring the price back to a stable level. In return, this entity received a large amount of unlocked LUNA Token , which it then sold on the market, generating an estimated profit of $1.28 billion. The SEC argued that both Jump and Terraform deliberately concealed this Vai , leading investors to believe that the algorithmic mechanism itself had proven effective.
The case with the SEC was eventually closed when Tai Mo Shan agreed to a settlement, agreeing to pay approximately $123 million in fines without admitting or denying the allegations. However, this agreement did not eliminate other legal risks, especially as Terraform Labs entered bankruptcy and asset liquidation proceedings.
Conversely, Jump Trading strongly refuted the new lawsuit, arguing that it was a desperate attempt to shift responsibility away from Terraform Labs and its founder, Do Kwon. A Jump representative stated that the company would pursue the case to the end to defend its position, while denying market manipulation as alleged.
