Terraform Labs bankruptcy trustee Todd Snyder has filed a $4 billion lawsuit against Jump Trading and several of its top executives.
According to the Wall Street Journal, the lawsuit alleges that Jump Trading, its co-founder William DiSomma, and former president of cryptocurrency trading Kanawa Karii illegally profited and contributed to the collapse of Terra in 2022.
In his court filing, Snyder alleged that Jump Trading and its management «actively exploited» the Terraform ecosystem, manipulating it and acting in their own interests. For example, the trading firm purchased a large quantity of LUNA tokens at a price of $0,40, while the market price exceeded $110.
In exchange, Jump Trading was required to maintain the TerraUSD peg to the US dollar, which would conceal the flaws in the algorithmic pegging mechanism. The lawsuit also claims this was a secret «gentlemen’s agreement» designed to avoid regulatory scrutiny. After the first de-pegging, the trading firm allegedly claimed the peg had been restored thanks to the mechanism, rather than reveal its involvement.
This isn’t the first lawsuit against Jump Trading. In May 2023, the company was accused of manipulating the TerraUSD price, violating the US Commodity Exchange Act, and unjust enrichment. The lawsuit is still pending in US court.