The administrator overseeing the liquidation of Terraform Labs has filed a sweeping $4 billion lawsuit against Jump Trading, accusing the Chicago-based market maker of playing a central role in the collapse of the Terra ecosystem in 2022.
The complaint alleges that Jump’s actions not only distorted market prices but also allowed the firm to extract massive profits while retail investors absorbed catastrophic losses.
The case adds a new chapter to the legal fallout from one of crypto’s most damaging failures.
The Office of the Terraform Labs Plan Administrator has filed a $4B lawsuit against Jump Trading over its direct role in the collapse of Terraform Labs, seeking to hold Jump to account for enriching itself through illicit market manipulation, self-dealing, and misuse of assets.…
— Terra 🌍 Powered by LUNA 🌕 (@terra_money) December 19, 2025
Claims of Artificial Price Support for TerraUSD
According to the lawsuit, Jump Trading allegedly intervened repeatedly to support TerraUSD (UST) during moments when the algorithmic stablecoin was losing its dollar peg. These interventions were allegedly carried out without public disclosure, creating the appearance that UST demand was organic and sustainable.
The filing argues that this artificial support misled the market into believing Terra’s stability mechanism was functioning, delaying a broader loss of confidence and encouraging additional capital to flow into the system.
Discounted LUNA Deals and Hidden Arrangements
At the center of the complaint are claims that Jump Trading entered into confidential agreements with Terraform Labs that granted the firm preferential access to LUNA tokens at extreme discounts. Court documents allege Jump was able to acquire LUNA for prices as low as $0.40, even as the token traded as high as $110 on public markets.
The liquidator claims these arrangements allowed Jump to profit from price appreciation fueled by its own market activity, creating a feedback loop that benefited the firm while exposing investors to growing systemic risk.
Alleged $1 Billion Windfall From Terra’s Collapse
The lawsuit estimates that Jump Trading generated approximately $1 billion in profits from its involvement with Terra-related trading and token agreements. These gains, the filing argues, came at the direct expense of investors who ultimately suffered losses during the roughly $40 billion collapse of the Terra ecosystem.
The complaint frames Jump’s role not as passive market making, but as active participation in sustaining an unstable system long enough to extract significant value.
Executives Named and Prior Regulatory Scrutiny
The case also names Jump co-founder William DiSomma and former head of Jump’s crypto division, Kanav Kariya, as individual defendants. Both executives previously invoked their Fifth Amendment rights numerous times during SEC questioning related to Terraform Labs.
Regulators have already scrutinized Jump’s involvement in Terra. In December 2024, a Jump subsidiary agreed to pay $123 million to settle SEC allegations tied to its dealings with Terraform, without admitting or denying wrongdoing.
Jump Trading Denies Allegations
Jump Trading has strongly rejected the claims, describing the lawsuit as “factually flawed and completely baseless.” The firm stated it intends to defend itself vigorously against the allegations.
The case is expected to be closely watched across the crypto industry, as it raises broader questions about the responsibilities and influence of major market makers during periods of systemic stress.
A Defining Legal Battle for Terra’s Aftermath
As Terraform’s liquidation process continues, the lawsuit represents one of the most aggressive attempts yet to assign accountability beyond Terraform’s founders. If successful, it could reshape how courts view the role of liquidity providers and trading firms in crypto market failures.
For now, the case underscores that the legal consequences of Terra’s collapse are far from settled.
