The bankruptcy court-appointed trustee for the collapse of Terraform Labs 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, charged with liquidating 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 president of the platform. Terra’s post-Chapter 11 X account confirmed the WSJ story in a post 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 conduct that directly caused the largest crypto crash in history.”
Terraform Labs collapsed in 2022 after its algorithmic stablecoin TerraUSD (UST) lost its peg to the dollar, causing a dramatic market spiral. Within days, its sister token, Luna, fell to almost 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, which 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 a few months later agreed to pay approximately $4.5 billion to the U.S. Securities and Exchange Commission (SEC) to settle a civil lawsuit alleging securities fraud. Terraform founder Do Kwon, who founded the company in 2018, pleaded guilty in August to two criminal charges and was sentenced last week to 15 years in prison.
The court-appointed bankruptcy trustee alleged that Jump Trading had a secret deal to prop up UST before its collapse and ultimately emerged from the Terraform failure with billions in profits, according to an Illinois district court filing.
Jump made about $1 billion from the sale of Luna, according to previous SEC filings cited by the WSJ.
