TL;DR:
- Terraform Labs’ estate, led by plan administrator Todd Snyder, sues Jump Trading and two executives in Illinois court, seeking $4 billion for creditors.
- The complaint alleges undisclosed deals and preferential terms, including discounted LUNA purchases, earlier selling after lock-ups were removed, and profits nearing $1 billion.
- Jump denies wrongdoing and plans to fight, as the case spotlights disclosure controls, support, and risk after Terra’s 2022 collapse and $40 billion wipeout.
Terraform Labs’ bankruptcy estate has filed a lawsuit seeking $4 billion in damages from high-frequency trading firm Jump Trading, escalating the debate over who benefited as Terra unraveled. A $4B recovery push puts counterparties under the microscope as plan administrator Todd Snyder, overseeing the wind-down, alleges Jump distorted the market and misled investors through undisclosed arrangements. The complaint, filed in the U.S. District Court for the Northern District of Illinois, also names executives William DiSomma and Kanav Kariya, and argues the conduct contributed to Terraform’s 2022 failure for creditor recoveries.
Inside the allegations and the strategic stakes
At the center is an allegation that private arrangements shaped market perception and signals. Secret deal economics and discounted LUNA anchor the case as the filing claims agreements tied to Terra’s stablecoin and LUNA date back as early as 2019 and let Jump accumulate tokens at steeply reduced prices across Terra markets. One example cited says Jump allegedly bought LUNA for $0.40, before prices later rose above $110. The estate also argues lock-up rules were removed so Jump could sell earlier than other participants, converting preferential terms into outsized profits.
The estate links that opacity to the scale of the fallout and investor decision-making. A narrative gap is portrayed as a multiplier for losses because, according to the complaint, investors believed stability was organic rather than reinforced by behind-the-scenes support. When TerraUSD later collapsed in May 2022, the filing describes a chain reaction that wiped out nearly $40 billion and hit the crypto market. It also alleges Jump made nearly $1 billion in profits while many investors suffered heavy losses as the peg broke and confidence evaporated in that period.
Jump has rejected the allegations and says it will defend itself in court. A courtroom fight now becomes the governance stress test as the firm frames the suit as an attempt to shift blame away from Terraform’s failed design. For market participants, the operational takeaway is that side letters, lock-ups, and preferential liquidity support are no longer back-office details, but board-level risk items that can surface years later in litigation, in discovery and document trails. For creditors, the posture is clear: the estate intends to monetize claims it views as recoverable.
