- Terraform wind down administrator files $4bn lawsuit against Jump Trading
- Case focuses on UST peg support and discounted LUNA purchases
- Lawsuit follows Terra collapse and prior SEC penalties
Terraform faces a new legal fight as its wind-down administrator targets Jump Trading with a $4 billion claim tied to the 2022 collapse of the Terra blockchain. Todd Snyder, confirmed in September 2024 to lead the Terraform Labs Wind Down Trust, says the estate now seeks recovery for creditors and accountability for conduct that the complaint links to UST, LUNA, and the wider Terra ecosystem. The lawsuit names Jump, several subsidiaries, and two executives, and it frames the dispute as a direct response to losses that reached about $40 billion when Terra failed in 2022.
Terraform bankruptcy lawsuit and the $4B claim
Snyder’s complaint accuses Jump Trading of market manipulation, investor fraud, and self-dealing connected to the rise and failure of Terra. The administrator posted on X that his office filed the $4B lawsuit and that the action aims to recover value for creditors. The filing also says the estate intends to hold Jump responsible for exploiting the ecosystem while retail investors absorbed the damage. The case arrives after a separate criminal outcome for Terra’s founder, Do Kwon, who received a 15-year prison sentence and pleaded guilty to defrauding investors, including claims about the design security of the UST stablecoin after a near-failure in 2021. The lawsuit places the center of gravity on how UST held its $1 target and how major trading activity influenced that process. According to the allegations, Jump did more than standard market making and used privileged arrangements that tied its profits to Terraform’s continued growth. Snyder’s filing argues that the public never saw key details during the critical months when Terra expanded quickly. It also claims that secrecy around interventions created a distorted picture of stability and demand, which influenced investor behavior and market confidence.
Jump Trading and the UST peg actions in 2021
Jump acted as a market maker for UST and LUNA, the primary Terra assets that powered the arbitrage system. UST aimed to stay at $1 through an arbitrage link with LUNA, and that link required active trading and investor participation. The lawsuit says Jump’s relationship went further than typical market making because of a separate agreement with Do Kwon and Kanav Kariya, the head of Jump’s crypto unit. Under that arrangement, Jump agreed to help protect UST’s peg, and the complaint says the deal did not specify methods, only the outcome. In May 2021, UST dropped to about $0.90, and the complaint says Kwon and Kariya reached a new deal at that point. Jump would buy UST until it returned to the peg, and Terraform would waive vesting requirements tied to LUNA allocations that Jump could purchase. The lawsuit claims that public messaging after the peg defense misled investors by presenting the episode as a success of the mechanism, not as a market intervention. Snyder’s filing also describes an incentive problem: Jump allegedly needed time to realize the benefits of its LUNA purchase rights, so secrecy protected future gains. Those LUNA rights sit at the heart of the allegations. The complaint states that Jump had the option to purchase up to 65 million LUNA tokens at $0.40 per token. It also says Jump could buy only about 1.2 million tokens per month through September 2025, which created a long runway for profits if Terra stayed afloat. In the lawsuit’s telling, Jump had a reason to support the peg quietly and preserve confidence while it continued to access LUNA at a steep discount.
Terraform, LUNA allocations, and the Luna Foundation Guard sales
Terraform’s complaint also focuses on the Luna Foundation Guard, which presented itself as an independent group designed to defend the UST peg. Snyder’s lawsuit alleges that Kwon and Kariya dominated the organization and shaped its activity, despite its public posture. The filing says Terraform gifted the foundation LUNA tokens worth more than $5 billion, and the foundation then sold that LUNA for other cryptocurrencies, including Bitcoin. The lawsuit claims that the foundation did not sell those tokens broadly and instead sold to Jump at a 40% discount to market value. The complaint treats those discounted sales as part of a broader pattern that moved value toward Jump while the public saw a narrative of organic stability support. Snyder’s filing also highlights the May 2022 crisis when UST fell below $1 again. It alleges that the foundation transferred its Bitcoin to Jump to use on its behalf, yet the lawsuit says no formal agreement governed that transfer. That gap matters because the filing claims uncertainty about how Jump used the Bitcoin and whether it acted in ways that benefited Jump financially during the defense. The lawsuit further names William DiSomma, another Jump executive, and describes efforts to rally other trading firms to defend UST’s peg as pressure mounted. According to the complaint, those firms instead traded against UST and LUNA, which accelerated Terra’s collapse. Snyder’s case frames that moment as a convergence of fragile mechanics, concentrated trading power, and misaligned incentives, with Terraform at the center and Jump positioned as a beneficiary of private terms.
Claims, defenses, and prior settlements with regulators
The complaint arrives against a backdrop of earlier regulatory action connected to Jump’s crypto activities. A Jump subsidiary, Tai Mo Shan, paid a $123 million fine after settling with the U.S. Securities and Exchange Commission in 2024. Snyder’s filing contrasts that figure with the $4 billion in fines that Terraform and Do Kwon were ordered to pay after losing a separate SEC lawsuit that same year. The lawsuit uses that contrast to argue that key actors still have not faced outcomes proportional to the alleged conduct and the scale of investor harm tied to Terra’s failure. Jump disputes the allegations. A spokesperson described the claims as baseless in a statement reported by The Wall Street Journal and said Terraform seeks to shift blame and financial responsibility away from Kwon’s crimes. The case also includes personnel context that the complaint treats as relevant to decision-making and access. Kariya joined Jump as an intern and became president of its crypto arm in 2021 at age 25, then announced his departure from the firm last year. The lawsuit also situates Jump as a long-established trading firm with deep experience in fast execution and market structure. Jump began in Chicago in 1999 and later built a crypto arm in 2021, after which it became a major market maker and investor in crypto assets. Snyder’s filing argues that this sophistication and access gave Jump the ability to shape outcomes around UST and LUNA, while ordinary investors relied on public statements and market pricing. The court process will test those claims through discovery, records, and testimony, and it will decide how much liability attaches to actions taken during both the 2021 peg defense and the 2022 collapse.
Conclusion
Terraform’s wind-down effort now centers on a $4 billion lawsuit that targets Jump Trading’s alleged role in UST’s peg defenses, LUNA purchase arrangements, and foundation-linked transactions that preceded the 2022 collapse. The complaint lays out specific figures, including 65 million LUNA at $0.40, about 1.2 million tokens per month through September 2025, a claimed 40% discount on sales, a $123 million settlement by Tai Mo Shan, and losses around $40 billion from the Terra failure. The court will weigh those allegations against Jump’s denial and determine whether the Terraform estate can recover value for creditors and assign responsibility for conduct tied to one of crypto’s largest breakdowns.
Disclaimer
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