Terraform Labs sues Jump Trading for $4B over Luna collapse scandal

The court-appointed administrator for Terraform Labs has initiated a $4 billion lawsuit against Jump Trading, its president Kanav Kariya, and co-founder William DiSomma. The complaint filed in the U.S. District Court for the Northern District of Illinois accuses Jump of unlawfully profiting from Terraform’s downfall through secret agreements and misleading actions.

According to the lawsuit, Jump secured deals as early as 2019 that allowed it to purchase Luna tokens at heavily discounted prices—reportedly as low as 40 cents per token while the market price was $110. In addition, Jump allegedly agreed to covertly support TerraUSD’s (UST) $1 peg by buying unstablecoins to keep the peg intact, contradicting earlier claims that an algorithm maintained stability.

Todd Snyder, the liquidation administrator, accused Jump of “actively exploit[ing] the Terraform Labs ecosystem through manipulation, concealment, and self-dealing that enriched Jump while financially devastating thousands of unsuspecting investors.” He said the lawsuit aims to “hold Jump Trading accountable for illegal conduct that directly caused the largest crypto collapse in history.” Public documents indicate that roughly $300 million has been recovered so far to compensate those affected by the Terra crash.

The lawsuit also states that in 2021, Jump and Terraform Labs entered a “gentlemen’s agreement” to avoid regulatory scrutiny and to hold up the UST peg in private. Despite these efforts, the peg broke in May 2021, causing large-scale losses. The complaint further alleges the Luna Foundation Guard, Terra’s reserve fund meant to protect the stablecoin, transferred nearly 50,000 bitcoins to Jump without formal contracts during the collapse.

During SEC investigations, Jump’s top executives reportedly invoked the Fifth Amendment hundreds of times when questioned about these undisclosed deals. This move has drawn additional regulatory scrutiny.

Jump Trading rejected the claims in a statement, asserting Terraform Labs is attempting to shift blame from the crimes committed by Do Kwon, the Terraform founder recently sentenced to 15 years in prison for his involvement in the collapse. Jump has faced multiple lawsuits and investigations over the years related to similar allegations.

Cryptocurrency data provider Arkham reported that Jump’s crypto holdings dropped from $9.6 billion in 2021 to $560 million in 2024, as the firm liquidated various decentralized finance (DeFi) positions. Jump also has ties to the now-defunct FTX exchange and reportedly withdrew $300 million the day before its collapse. The company allegedly collaborated with Alameda Research, FTX founder Sam Bankman-Fried’s firm, in seed funding and yield farming operations.

Last year, Jump’s subsidiary Tai Mo Shan paid $123 million following SEC charges that the firm “negligently” misled investors about UST’s stability. These developments underscore ongoing regulatory and legal challenges facing Jump related to the Terra ecosystem.

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