Terraform liquidator sues Jump Trading, accusing it of fueling the Terra collapse and seeking $4 billion in damages

The court-appointed administrator responsible for liquidating Terraform Labs’ remaining assets has pointed the finger at the well-known quantitative trading firm Jump Trading, accusing it of playing a key role in the rapid rise and collapse of the Terra ecosystem and profiting enormously from it. According to The Wall Street Journal, the liquidator Todd Snyder has filed a lawsuit in the federal court in Illinois, seeking approximately $4 billion in damages from Jump Trading, its co-founder William DiSomma, and Jump Crypto’s former president Kanav Kariya.

In the lawsuit, Snyder states that Jump Trading systematically exploited the Terraform Labs ecosystem through market manipulation, concealment of critical information, and proprietary trading, while shifting the risks onto numerous uninformed investors. He points out that these actions directly contributed to one of the largest collapses in cryptocurrency history, causing irreversible losses to the market and investors.

The collapse of the Terra ecosystem occurred in May 2022. At that time, the algorithmic stablecoin TerraUSD (UST) maintained its $1 peg through an arbitrage mechanism with its sister token LUNA. However, after market confidence waned, this mechanism quickly failed, and the prices of UST and LUNA approached zero within days, evaporating approximately $40 billion in market value and triggering a chain reaction across the crypto industry. Several institutions became insolvent as a result, including the later-failed Three Arrows Capital.

The lawsuit further alleges that before UST ultimately “de-pegged,” Jump had secretly arranged to provide support to maintain the peg in the market and profited from the subsequent sharp price fluctuations. Previously, the U.S. Securities and Exchange Commission (SEC) also mentioned in related documents that Jump profited about $1 billion by trading LUNA tokens.

Terraform Labs filed for bankruptcy protection in January 2024. Public records show that the liquidator has recovered approximately $300 million for creditors so far. The lawsuit against Jump Trading is seen as an important step in holding third-party entities accountable.

This case also comes after the sudden downfall of Terraform’s former management. The company and its founder Do Kwon reached a settlement with the SEC in 2024, involving about $4.5 billion. Kwon pleaded guilty to related charges in August 2025 and was recently sentenced to 15 years in prison by a federal court in New York. The lawsuit is likely to reignite intense discussions about the responsibility for the Terra collapse.