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The administrators managing the remnants of Do Kwon’s Terraform Labs have targeted one of the largest trading firms in crypto, claiming that Jump Trading benefited from the rise of Terra and contributed to its downfall.
Todd Snyder, the court-appointed administrator for the Terraform bankruptcy, has initiated a lawsuit in federal court in Illinois, seeking $4 billion in damages from Jump Trading, co-founder William DiSomma, and former president of Jump Crypto, Kanav Kariya, as reported by the Wall Street Journal on Thursday.
“Jump Trading deliberately took advantage of the Terraform Labs ecosystem through manipulation, deceit, and self-dealing, which enriched Jump while causing significant financial harm to thousands of unsuspecting investors,” Snyder stated.
“This lawsuit is a crucial step to ensure Jump Trading is held responsible for unlawful actions that directly led to the largest collapse in cryptocurrency history.”
The Office of the Terraform Labs Plan Administrator has initiated a $4 billion lawsuit against Jump Trading regarding its direct involvement in the collapse of Terraform Labs, aiming to hold Jump accountable for profiting through illegal market manipulation, self-dealing, and asset misuse.…
— Terra
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(@terra_money) December 19, 2025
(@terra_money) December 19, 2025Terra’s Downward Spiral and the Aftermath
The collapse of Terraform continues to cast a shadow over the market. TerraUSD, referred to as UST, was promoted as a stablecoin intended to maintain a value of $1 through an algorithm connected to its sister token, Luna, known as LUNA. When UST lost its peg in May 2022, the mechanism disintegrated, causing both tokens to plummet towards near zero within days.
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This obliteration wiped out roughly $40 billion in value and sent shockwaves throughout the industry, impacting lenders, funds, and exchanges that had relied on UST yields and Luna liquidity as stable and robust.
Three Arrows Capital was among the first significant victims, with subsequent failures escalating as trust and collateral disappeared.
Terraform declared bankruptcy in January 2024, and public documents indicate that the estate has so far retrieved about $300 million for creditors while it dismantles what remains.
Allegations of Peg Support and Profits from Terra’s Decline
Snyder’s lawsuit asserts that Jump entered into a covert agreement to uphold TerraUSD’s peg before its final collapse and subsequently exited the chaos with substantial profits.
Previously, regulators highlighted Jump’s trading activities in Luna, with the SEC stating in court documents that Jump earned approximately $1 billion by trading the token.
This lawsuit follows a tumultuous year for Terraform’s former leadership. The company and Kwon reached an estimated $4.5 billion settlement with the SEC in 2024 after a jury verdict on securities fraud charges.
Kwon, once a well-known founder who ridiculed critics during UST’s rise, pleaded guilty in August 2025, and a federal judge in New York sentenced him to 15 years in prison last week.
The post Terraform Liquidators Allege Jump Trading Helped Fuel Crypto’s Biggest Crash: Report appeared first on Cryptonews.
