The bankruptcy court-appointed administrator of the Terraform Labs collapse is suing Jump Trading, accusing the high-speed trading company of illegally profiting from and contributing to the $40 billion collapse, according to the Wall Street Journal.
Todd Snyder, tasked with winding down what’s left of the crypto empire, is seeking $4 billion in damages from the trading firm, its co-founder William DiSomma and Kanav Kareiya, who started as an intern and rose to become the platform’s president. Terra’s Post-Chapter 11 X account confirmed the WSJ’s story in a post on X Friday
“Jump Trading actively exploited the Terraform Labs ecosystem through manipulation, concealment and self-dealing that enriched Jump while financially destroying thousands of unsuspecting investors,” Snyder said. “This action is a necessary step to hold Jump Trading accountable for illegal conduct 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, dropped to near zero. The $40 billion implosion wiped out the savings of hundreds of thousands of investors globally and set off a domino effect of failures across the crypto industry that came to a head with the collapse of Sam Bankman-Fried’s FTX exchange in November.
The Singapore-based company filed for bankruptcy in January 2024 and just months later agreed to pay about $4.5 billion to the US Securities and Exchange Commission (SEC) to settle a civil securities fraud lawsuit. Terraform founder Do Kwon, who started the company in 2018, pleaded guilty in August to two criminal counts and was sentenced to 15 years in prison last week.
The court-appointed bankruptcy trustee alleged that Jump Trading had a secret agreement to prop up UST before its collapse and ultimately walked away from Terraform’s failure with billions in profits, according to an Illinois district court.
Jump made about $1 billion selling Luna, according to earlier SEC filings cited by the WSJ.
