The fallout from the 2022 Terra (LUNA) collapse has taken a massive legal turn. On Friday, December 19, 2025, the administrator overseeing the liquidation of Terraform Labs filed a $4 billion lawsuit against high-frequency trading giant Jump Trading and its top brass.
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The complaint, filed in the U.S. District Court for the Northern District of Illinois, targets Jump Trading LLC, co-founder William DiSomma, and former Jump Crypto president Kanav Kariya. The Terraform estate alleges that Jump was not a neutral market maker but a “central architect” that actively manipulated the ecosystem to extract billions in unlawful profits while ordinary investors were wiped out.
Secret “Gentlemen’s Agreements” Hid Algorithmic Flaws
The lawsuit effectively exploits the paper trail of what it calls a series of “backdoor deals” between Jump and Terraform founder Do Kwon. According to the filing, Jump entered into confidential agreements as early as 2019 that allowed the firm to purchase LUNA at a massive discount, allegedly acquiring millions of tokens for just $0.40 while they were trading above $110.
In exchange, Jump reportedly entered into a “gentlemen’s agreement” to artificially prop up the TerraUSD (UST) peg during stress events to conceal the system’s fatal flaws. When UST first depegged in May 2021, Jump allegedly bought over $20 million of the stablecoin to restore the $1 price point. This allowed Terraform to publicly claim the “algorithm” had fixed itself, which is a narrative the lawsuit calls a calculated deception.
Suit Claims that $1.5 Billion Worth of Bitcoin Was Transferred Without a Contract
The estate’s administrator, Todd Snyder, also targets the suspicious movement of assets during Terra’s final “death spiral” in May 2022. The suit claims that the Luna Foundation Guard (LFG), directed by Kwon and Kariya, transferred nearly 50,000 BTC (worth roughly $1.5 billion at the time) to Jump Trading without any formal written agreement.
This transfer, meant to defend the UST peg, was allegedly misused by Jump for self-serving trades rather than the collective protection of the ecosystem. Snyder characterizes this as a blatant drain of creditor assets, intended to prioritize Jump’s exit while retail investors faced a total loss. Jump has dismissed the lawsuit as a “desperate attempt” by Terraform to shift blame for Kwon’s crimes, vowing to vigorously defend itself in court.
Regulatory Noose Closes on Jump’s Executives
The $4 billion claim follows years of tightening regulatory pressure on Jump’s crypto operations. In late 2024, Jump’s subsidiary, Tai Mo Shan, paid a $123 million settlement to the SEC for misleading investors about UST stability, though the firm neither admitted nor denied the findings.
The legal pressure has already seen leadership changes; Kanav Kariya stepped down as president of Jump Crypto in mid-2024 following reports of a CFTC investigation. With Do Kwon recently sentenced to 15 years in prison, the focus has now shifted to recovering the “ill-gotten gains” that liquidators claim reached into the billions.
The Terra-Jump “Profit Ledger”
The following table summarizes the key financial allegations brought by the Terraform Labs estate against Jump Trading. This highlights the massive discrepancy between Jump’s acquisition costs and market prices.
| Allegation Component | Value / Detail | Status |
| Total Damages Sought | $4 Billion | Pending Lawsuit |
| LUNA Acquisition Price | $0.40 (vs. $110 Market Price) | Alleged Secret Deal |
| Jump’s Alleged Profits | $1.28 Billion | Cited in 2024 SEC Settlement |
| LFG Bitcoin Transfer | 49,121 BTC (~$1.5B Value) | Disputed Transfer |
| SEC Penalty (Tai Mo Shan) | $123 Million | Settled Dec 2024 |
Key Takeaway
The bottom line is that the “smart money” in the Terra collapse is now being accused of being rigged money. If the liquidators prove that Jump was secretly propping up the peg while buying tokens for pennies on the dollar, it transforms the Terra crash from a “failed experiment” into a premeditated multibillion-dollar fraud. For the crypto industry, this case is a final reckoning for the “wild west” era of institutional market making.
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