Terraform Liquidator Sues Jump Trading for $4B Over Alleged Role in Terra Collapse

Highlights:

• The Terraform liquidator has sued Jump Trading over claims tied to the Terra collapse.
• The lawsuit focuses on secret support for TerraUSD and large token sales before the market collapse.
• The lawsuit comes amid the sentencing of Do Kwon as courts handle cases linked to the Terra collapse.

The court-appointed administrator overseeing Terraform Labs’ bankruptcy has filed a $4 billion lawsuit in U.S. federal court in Illinois. Todd Snyder brought the case against Jump Trading, co-founder William DiSomma, and former Jump Crypto president Kanav Kariya. The complaint alleges manipulation and concealed conduct linked to Terra’s collapse. Snyder seeks damages to increase creditor recoveries. Therefore, the lawsuit now drives the liquidation strategy.

The administrator overseeing the wind-down of Terraform Labs has sued high-frequency trading firm Jump Trading, alleging it unlawfully profited from and helped contribute to the collapse of Do Kwon’s crypto empire. The filing seeks $4 billion in damages from Jump, co-founder…

— Wu Blockchain (@WuBlockchain) December 19, 2025

Snyder is responsible for handling the bankruptcy following Terra’s collapse in May 2022. The collapse wiped out an estimated $40 billion in market value in a few days. Some companies collapsed afterwards as liquidity ran dry. The incident continues to be one of the biggest market failures in crypto.

Terraform Labs was declared bankrupt in January last year. The estate has since recovered approximately $300 million, according to court filings. Nonetheless, Snyder indicates that this number is still way lower than total creditor claims.

Terraform Liquidator Sues Over Alleged Peg Support and Token Profits

The lawsuit traces disputed conduct back to 2019. Snyder alleges undisclosed arrangements allowed discounted purchases of LUNA. At the same time, the defendants publicly acted as neutral market participants. As a result, the complaint says investors received misleading market signals. A key section focuses on a TerraUSD depeg in May 2021. During that episode, the stablecoin briefly fell below its dollar peg. The lawsuit claims large token purchases restored the peg. However, public statements credited the algorithmic design.

Snyder asserts that messaging enhanced trust in the system. Investors assumed that the mechanism worked under stress. As a result, the number of people involved increased regardless of the unmitigated risks. According to the complaint, subsequent contract amendments eliminated vesting limitations on LUNA holdings.

Those changes allegedly allowed regular token sales at higher prices. Snyder says those sales generated outsized gains. Moreover, the filing references prior regulatory findings that cited profits near $1 billion. Therefore, the lawsuit builds on earlier enforcement records.

The complaint also addresses Terra’s final collapse in May 2022. During that period, TerraUSD lost its peg again. Snyder claims nearly 50,000 Bitcoin moved from reserve wallets. He says those transfers lacked formal agreements and transparency. According to the filing, these actions worsened market instability.

Legal Pressure Mounts as Terra Cases Continue to Expand

The lawsuit adds to the expanding legal fallout tied to Terra. In December last year, a Jump subsidiary paid $123 million to settle regulatory charges. That settlement addressed misleading statements related to TerraUSD stability. Additionally, Terraform Labs reached a separate settlement with U.S. regulators. Executives connected to the ecosystem have faced sustained scrutiny. During earlier investigations, DiSomma and Kariya declined to testify by invoking constitutional protections during questioning.

The lawsuit comes amid the sentencing of Do Kwon, the CEO of Terraform Labs. Authorities arrested Kwon at Podgorica airport in Montenegro before courts approved his extradition to the United States. After extradition, Kwon pleaded guilty to fraud-related charges. Meanwhile, Judge Paul Engelmayer recently sentenced him to 15 years in prison.

Crypto mogul Do Kwon sentenced to 15 years in prison over massive $40B currency collapse https://t.co/9xLNCJF4mT pic.twitter.com/ZIhfrvlKjz

— New York Post (@nypost) December 11, 2025

The sentencing follows years of investigations into Terra’s collapse. Meanwhile, Do Kwon might face fresh charges in Japan despite being sentenced in the United States. Korean prosecutors plan to move ahead with charges tied to violations of the Capital Markets Act.