Claiming $4 billion! Terraform Labs bankruptcy administrator sues Jump Trading: directly responsible for the LUNA collapse!

According to The Wall Street Journal, the bankruptcy trustee of Terraform Labs (the cryptocurrency company founded by Do Kwon), Todd Snyder, has filed a lawsuit in the U.S. Federal Court in Illinois, accusing high-frequency trading firm and crypto market maker Jump Trading and its executives, including co-founder William DiSomma and former head of the crypto division Kanav Kariya, seeking damages of up to $4 billion.
(Background: Arthur Hayes: Big names in trouble—“Full crypto liquidation,” is Jump Trading the culprit behind the crash?)
(Additional background: Terra claims innocence but is betrayed! Files court motion against Jump Trading for “shorting UST report”)

According to The Wall Street Journal, the bankruptcy trustee of Terraform Labs (the cryptocurrency company founded by Do Kwon), Todd Snyder, has filed a lawsuit in the U.S. Federal Court in Illinois, accusing high-frequency trading firm and crypto market maker Jump Trading and its executives, including co-founder William DiSomma and former head of the crypto division Kanav Kariya, seeking damages of up to $4 billion.

Jump Trading Accused of Responsible for LUNA Collapse

In the complaint, Todd Snyder alleges that Jump Trading secretly reached an agreement with Terraform Labs starting in 2019 to purchase large amounts of LUNA tokens at deeply discounted prices; in exchange, Jump secretly bought large amounts of UST when TerraUSD (UST) first decoupled in May 2021 to maintain its 1:1 peg to the dollar, while also claiming to the public that this was an automatic re-pegging process, misleading investors into believing the Terra system was highly stable.

The complaint further states that Jump Trading later demanded the unlocking of token lock-up restrictions, quickly selling LUNA for billions of dollars in profit. By the time Terra ultimately collapsed in May 2022, Luna Foundation Guard (LFG) had transferred about $1.5 billion worth of Bitcoin to Jump, despite lacking formal written agreements, allegedly enriching themselves and exacerbating the collapse.

Snyder emphasizes that Jump Trading manipulated the market, concealed information, and engaged in self-enrichment behaviors, deeply exploiting the Terraform ecosystem, profiting from it, while causing massive losses to thousands of investors, directly leading to the largest crypto crash in history.

Terra Ecosystem Vanishes $40 Billion

This lawsuit is the latest development in the legal actions following the Terra collapse. Terraform Labs’ algorithmic stablecoin UST lost its peg in May 2022, causing its sister token LUNA to plummet to near zero, with the entire ecosystem’s market value evaporating by approximately $40 billion, wiping out the funds of hundreds of thousands of investors worldwide, and triggering a chain reaction of collapses in the crypto industry, including the FTX exchange’s bankruptcy in November of the same year.

Terraform Labs filed for bankruptcy in January 2024 and settled with the U.S. Securities and Exchange Commission (SEC), paying approximately $4.5 billion in fines. Founder Do Kwon pleaded guilty to two criminal charges in August 2025 and was sentenced to 15 years in prison last week.