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Terraform Labs’ court-appointed liquidator, Todd Snyder, has filed a $4 billion lawsuit against Jump Trading, its co-founder William DiSomma, and former president Kanav Kariya. The suit, filed in an Illinois district court, alleges the high-frequency trading firm secretly manipulated the TerraUSD (UST) stablecoin for massive profits before its $40 billion collapse in May 2022. --> The core of the complaint alleges Jump entered a clandestine agreement to artificially support UST’s price, misleading investors about its stability. The lawsuit claims that when UST first lost its peg in May 2021, Jump Trading covertly bought large amounts of the token to restore its price. This action, the filing argues, was falsely portrayed by Terraform Labs as a natural recovery by its algorithm. “This action is a necessary step to hold Jump Trading accountable for illegal conduct that directly caused the largest crypto collapse in history,” Snyder stated, according to reports. The Office of the Terraform Labs Plan Administrator has filed a $4B lawsuit against Jump Trading over its direct role in the collapse of Terraform Labs, seeking to hold Jump to account for enriching itself through illicit market manipulation, self-dealing, and misuse of assets.… — Terra 🌍 Powered by LUNA 🌕 (@terra_money) December 19, 2025 In exchange for the intervention, Terraform Labs allegedly modified a prior agreement, allowing Jump to purchase LUNA LUNA $0.11 24h volatility: 2.3% Market cap: $75.76 M Vol. 24h: $76.32 M tokens at a staggering 99% discount. The suit claims Jump acquired LUNA for as low as $0.40 when the market price was over $90, later selling the tokens for a reported profit of $1.28 billion. A Pattern of Deception This legal action follows previous findings by the U.S. Securities and Exchange Commission (SEC). In December 2024, the SEC charged Jump’s subsidiary, Tai Mo Shan Ltd., with misleading investors about UST’s stability. Jump settled that case for $123 million without admitting or denying the findings. The SEC’s investigation highlighted the same May 2021 de-peg event, concluding that Jump’s intervention was incentivized by the discounted LUNA deal. A spokesperson for Jump called the new lawsuit a “desperate attempt” to shift blame from Terraform Labs and its founder, Do Kwon, and stated the firm would defend itself vigorously. The original Terra (LUNA) token has since been rebranded to Terra Classic LUNC $0.000040 24h volatility: 4.9% Market cap: $219.67 M Vol. 24h: $59.12 M , while a new token, Terra (LUNA), trades at approximately $0.11, down nearly 2% over the past 24 hours. Terraform Labs co-founder Do Kwon was recently sentenced to 15 years in a U.S. federal prison by Judge Paul A. Engelmayer for his role in the $40 billion Terra/Luna collapse. Market Implications and Ongoing Legal Risks While the lawsuit targets Jump, its implications extend to the entire market-making sector in crypto. The case scrutinizes the thin line between providing liquidity and active market manipulation. For institutional traders, this lawsuit is a critical test of legal liability for firms that may have profited from undisclosed, preferential deals that masked fundamental protocol flaws. The outcome could set a precedent for how much responsibility market makers bear when a project they support collapses, potentially forcing greater transparency in their agreements with token issuers. Do Kwon may still face a separate trial in South Korea, where he could receive up to 30 years in prison if extradited and found guilty. next Hamza is an experienced crypto editor/writer with a deep understanding of blockchain technology, cryptocurrency markets, and digital finance. He is passionate about making complex topics accessible and helping readers navigate the fast-evolving world of crypto. Hamza Tariq on LinkedIn Share:

Years after the Terra (LUNA) crash that shook Bitcoin (BTC) and altcoins, it continues to be a topic of discussion. In the latest development, Terraform Labs has filed a $4 billion lawsuit against Jump Trading. According to the Wall Street Journal, Terraform Labs’ bankruptcy administrator has filed a lawsuit against cryptocurrency market maker Jump Trading, seeking a total of $4 billion in damages. According to the complaint, Terraform Labs Jump Trading allegedly secretly manipulated the Terra ecosystem and profited from its collapse. The lawsuit alleges that Jump Trading and its executives, William DiSomma and Kanav Kariya, profited unfairly and contributed to Terraform’s collapse in 2022. The lawsuit alleges that Jump Trading made large-scale purchases of UST between 2021 and 2022 during its period of decline from a fixed rate, with the aim of artificially boosting the price and profiting approximately $1 billion from these activities. According to the liquidator, these transactions were not only profit-driven but also contributed to the ecosystem becoming unsustainable and collapsing. Jump Trading denied the allegations, arguing that the lawsuit was an attempt to deflect blame and deflect attention from Terraform’s failures and culpability. The company also added that they would strongly defend themselves in court. *This is not investment advice. Follow our Telegram and Twitter account now for exclusive news, analytics and on-chain data!

The cryptocurrency world is rocked by a staggering new legal battle. The bankruptcy estate of Terraform Labs has launched an explosive $4 billion lawsuit against market maker Jump Trading. This Terraform Labs lawsuit alleges that secretive trading actions directly fueled the catastrophic collapse of the Terra ecosystem, sending shockwaves through the entire crypto market. What is the $4B Terraform Labs Lawsuit About? According to a report by The Wall Street Journal, the administrator overseeing Terraform Labs’ bankruptcy has filed a monumental complaint. The core accusation is stark: Jump Trading allegedly engaged in undisclosed, large-scale interventions to prop up the price of TerraUSD (UST) during its de-pegging events in 2021 and 2022. The lawsuit claims these actions were not a rescue mission but a profitable scheme that ultimately made the ecosystem’s failure inevitable. How Did Jump Trading Allegedly Profit? The complaint paints a detailed picture of the alleged manipulation. Here are the key actions Jump Trading is accused of taking: Massive Secret Purchases: Executing huge buy orders of UST whenever its price fell below the $1 peg. Artificially Inflating Value: These purchases created a false impression of stability and demand. Extracting Enormous Profits: The lawsuit states Jump earned roughly $1 billion from these activities, profiting from the very volatility it was secretly managing. Therefore, the Terraform Labs lawsuit argues that these actions were not neutral market making. Instead, they were a form of manipulation that deceived the public and contributed to a massive, systemic risk. Why Does This Terraform Labs Lawsuit Matter for Crypto? This case extends far beyond a simple financial dispute. It strikes at the heart of two critical issues in decentralized finance: transparency and market integrity. The allegations, if proven, suggest a major player exploited its position and inside knowledge at the potential expense of millions of retail investors. This Terraform Labs lawsuit could set a powerful legal precedent for how market manipulation is defined and punished in the crypto space, influencing future regulation and exchange practices. What Are the Potential Outcomes of This Legal Battle? The path forward is complex and will be closely watched. First, Jump Trading will vigorously defend against these allegations. The discovery process could unveil private communications and trading data, providing unprecedented insight into the events leading to Terra’s collapse. A ruling in favor of the Terraform Labs estate could lead to massive financial penalties and stricter oversight for market makers. However, a victory for Jump would reinforce the current, often opaque, operational norms in crypto trading. Conclusion: A Watershed Moment for Accountability This explosive $4 billion Terraform Labs lawsuit is more than a claim for damages. It is a direct challenge to the shadowy operations that can thrive in crypto’s less-regulated corners. The case forces the industry to confront difficult questions about the role of large, influential firms and the true meaning of a free and fair market. Its resolution will undoubtedly leave a lasting mark on the future of cryptocurrency regulation and investor protection. Frequently Asked Questions (FAQs) Q1: What is Terraform Labs suing Jump Trading for?A1: Terraform Labs’ bankruptcy estate is suing for $4 billion, alleging Jump Trading secretly manipulated the price of TerraUSD (UST) for massive profit, which contributed to the ecosystem’s collapse. Q2: How much did Jump Trading allegedly make?A2: The lawsuit claims Jump Trading earned approximately $1 billion in profits from its alleged market-making activities around UST. Q3: What is a “de-pegging” event mentioned in the lawsuit?A3: A de-pegging event is when a stablecoin like UST, which is supposed to maintain a 1:1 value with the US dollar, falls below or rises above that $1 price. Q4: Could this lawsuit affect other crypto companies?A4: Yes. The legal arguments and outcome could set a precedent for defining market manipulation in crypto, potentially affecting how all large trading firms and exchanges operate. Q5: Has Jump Trading responded to the lawsuit?A5: As of the initial filing reported by the Wall Street Journal, Jump Trading has not issued a public statement. A legal defense is expected. Q6: What happens to the money if Terraform Labs wins?A6: Any funds recovered would likely go to the bankruptcy estate to pay back creditors and investors who suffered losses in the Terra/LUNA collapse. Ready to dive deeper into the stories shaping the future of finance? 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Do Kwon’s Trouble Isn’t Over: 15 Years in the US and 30+ More Possible in Korea Do Kwon, co-founder of Terra (LUNA/UST), has been sentenced to 15 years in U.S. prison for crypto fraud linked to the $40B Terra collapse. What many miss: 🔹 This does NOT end his legal trouble 🔹 South Korea still has active charges 🔹 Korean prosecutors say a separate trial could mean 30+ more years if he’s convicted there How this could happen: After serving part of his U.S. sentence, Kwon may be transferred to South Korea, where punishment would be independent of the U.S. case. Why it matters to investors: This case sets a global precedent, Crypto founders can face multiple sentences across countries for the same misconduct. Lesson: Decentralization doesn’t mean no accountability. Regulators are now playing a long game. Stay informed. Risk management starts with awareness.