Jump Trading Sued for $4 Billion in Connection to Terraform Labs Collapse
Terraform Labs' bankruptcy administrator Todd Snyder has filed a federal lawsuit against Jump Trading seeking $4 billion in damages. Co-defendants in the case include Jump co-founder William DiSomma and Kanav Kareiya, who started as an intern and later became president of Jump Trading.
The lawsuit alleges that Jump Trading actively profited from and contributed to Terraform's $40 billion collapse. Among the claims are a secret agreement to prop up the TerraUSD (UST) stablecoin and illicit self-dealing practices.
Terraform Labs collapsed in 2022 after its TerraUSD stablecoin lost its peg, and the Luna token plummeted to near zero. This collapse triggered a broader downturn in the cryptocurrency market and was a factor leading to the FTX exchange collapse later that year.
Terraform Labs filed for bankruptcy in January 2024. Subsequently, the company agreed to pay about $4.5 billion to settle a civil securities fraud lawsuit with the U.S. Securities and Exchange Commission.
Do Kwon, the founder of Terraform Labs who started the company in 2018, pleaded guilty in August to two criminal counts and was sentenced to 15 years in prison.
According to SEC filings cited by the Wall Street Journal, Jump Trading made approximately $1 billion from selling Luna tokens. The lawsuit against Jump Trading was filed in an Illinois district court. Terraform Labs' official X account (formerly Twitter) echoed the Wall Street Journal's reporting on Jump Trading's involvement.
