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.
This article was written by Jared Kirui at www.financemagnates.com.
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