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Terraform Labs Administrator Sues Jump Trading for $4B Collapse
The court-appointed administrator handling Terraform Labs’ liquidation has filed a lawsuit against Jump Trading and its executives, alleging responsibility for the crypto firm’s multibillion-dollar collapse in 2022.
$4 Billion in Damages Sought
According to a report by the Wall Street Journal, Todd Snyder, Terraform Labs’ plan administrator, is seeking $4 billion in damages from Jump Trading, co-founder William DiSomma, and former president Kanav Kariya, who departed the firm in 2024. The company confirmed the report via a social media post.
Terraform Labs, founded by Do Kwon, collapsed in 2022 when its algorithmic stablecoin TerraUSD lost its dollar peg, triggering a death spiral alongside its sister cryptocurrency Luna. This collapse wiped out over $40 billion from the market and caused a ripple effect of bankruptcies across the crypto lending industry.
Allegations Against Jump Trading
Snyder claims that Jump Trading “actively exploited” Terraform Labs’ ecosystem by entering a backdoor agreement that temporarily inflated the value of TerraUSD before its collapse. According to the administrator, Jump profited billions from this arrangement.
“This action is a necessary step to hold Jump Trading accountable for illegal conduct that directly caused the largest crypto collapse in history,” Snyder told the WSJ.
The alleged secret dealings were previously documented by the U.S. Securities and Exchange Commission (SEC). In 2021, Jump’s crypto unit, Tai Mo Shan, reportedly purchased $20 million worth of TerraUSD after it briefly lost its dollar peg. In return, Tai Mo Shan received early access to unlocked Luna tokens, which it sold into the market.
The SEC stated that this arrangement misled investors about the stability of TerraUSD, and accused Tai Mo Shan of earning $1.28 billion from the deal. A subsequent settlement required Tai Mo Shan to pay approximately $123 million in fines.
Terraform Bankruptcy and Recovery Efforts
After unsuccessful attempts to revive its ecosystem, Terraform Labs filed for bankruptcy in 2024 and agreed to pay the SEC $4.47 billion in penalties. Do Kwon was sentenced last week to 15 years in U.S. prison following a guilty plea to two criminal charges.
So far, around $300 million in assets have been recovered to compensate creditors, according to the WSJ.
Jump Trading Responds
A spokesperson for Jump Trading described the lawsuit as a “desperate attempt” to shift blame from Terraform and Kwon, adding that the firm intends to vigorously defend itself against the allegations.
The case underscores ongoing legal and regulatory scrutiny in the aftermath of one of the largest collapses in crypto history.
