Terraform Labs files $4 billion lawsuit against Jump Trading

Key points:

• Terraform Labs has filed a $4 billion lawsuit against Jump Trading, accusing the company of market manipulation.
• According to the plaintiffs, the market maker secretly supported the UST exchange rate, creating the illusion of stability before Terra’s collapse.

The collapse of the Terra ecosystem has taken a new turn: on December 18, 2025, Terraform Labs’ bankruptcy trustee filed a $4 billion lawsuit against Jump Trading and its management. Liquidator Todd Snyder claims that one of the largest market makers in the United States played a key role in the destruction of a crypto project worth about $40 billion by manipulating the market and profiting from it to the tune of billions of dollars.

According to the plaintiff, Jump Trading secretly intervened in trading in May 2021 to support the price of the UST algorithmic stablecoin when it first lost its peg to the dollar. These actions allegedly created the illusion of stability in the system and attracted new investments, shortly before Terra’s final collapse in 2022.

Secret deal and profits amid the illusion of stability

At the heart of the lawsuit is an undisclosed agreement between Terraform Labs founder Do Kwon and Jump Crypto CEO Kanav Kariya. After restoring the UST peg, the documents say, Jump received more than 61 million LUNA tokens at a discount of nearly 100%. These assets were subsequently sold on the market, generating approximately $1,28 billion in profits for the company.

The liquidator insists that this was not a matter of market support, but rather a deliberate concealment of systemic problems with the project. The plaintiffs also have additional questions about Kariya’s behavior, who, in another SEC investigation, refused to answer questions, citing the Fifth Amendment to the US Constitution.

The new lawsuit followed shortly after an agreement between Jump Trading’s subsidiary and the US Securities and Exchange Commission (SEC): at the end of 2024, the company paid $123 million without admitting guilt. Now, Terraform Labs’ claims could set a precedent for the entire industry, strengthening requirements for transparency in the work of market makers and their private agreements that affect the stability of digital assets.

Earlier, Terraform Labs co-founder Do Kwon received 15 years in prison for his role in the collapse of the TerraUSD ecosystem.