The bankruptcy court-appointed administrator of collapsed Terraform Labs is suing Jump Trading, accusing the high-speed trading company of illegally profiting and contributing to the $40 billion crash, according to the Wall Street Journal.
Todd Snyder, charged with bringing down what remains of the crypto empire, is seeking $4 billion in damages from the trading company, its co-founder William DiSomma and Kanav Kareiya, who started as an intern and rose to become the platform’s president. Terra’s X account after Chapter 11 confirmed the WSJ story in an article on X on Friday.
“Jump Trading actively exploited the Terraform Labs ecosystem through manipulation, concealment, and self-dealing that enriched Jump while financially devastating thousands of unsuspecting investors,” Snyder said. “This action is a necessary step to hold Jump Trading accountable for the illegal behavior that directly caused the largest crypto collapse in history.”
Terraform Labs collapsed in 2022 after its algorithmic stablecoin TerraUSD (UST) lost its dollar peg, triggering a dramatic market spiral. Within days, its sister token, Luna, plunged to near zero. The $40 billion implosion wiped out the savings of hundreds of thousands of investors around the world and set off a domino effect of failures across the crypto industry, reaching its climax with the collapse of Sam Bankman-Fried’s FTX exchange in November.
The Singapore-based company filed for bankruptcy in January 2024 and agreed a few months later to pay about $4.5 billion to the U.S. Securities and Exchange Commission (SEC) to settle a civil lawsuit over securities fraud. Terraform founder Do Kwon, who launched the company in 2018, pleaded guilty in August to two counts and was sentenced last week to 15 years in prison.
The court-appointed bankruptcy administrator alleged that Jump Trading struck a secret deal to prop up UST before its collapse and ultimately escaped Terraform’s failure with billions in gains, according to a filing in Illinois District Court.
Jump made about $1 billion from the sale of Luna, according to previous SEC filings cited by the WSJ.
