Terraform Labs liquidator sues Jump Trading for $4 billion in damages..."Involvement in Terra-Luna collapse"

The liquidation trustee overseeing Terraform Labs' bankruptcy proceedings has filed a lawsuit seeking $4 billion in damages against quantitative trading firm Jump Trading. The allegation is that Jump Trading, through secret contracts, helped cause the Terra-Luna collapse and reaped massive illicit gains.

According to the Wall Street Journal on the 18th (local time), Todd Snyder, Terraform Labs' liquidation trustee, filed a complaint that day in the U.S. District Court for the Northern District of Illinois against Jump Trading, co-founder William DiSoma, and former head of Jump Crypto Kanav Kariya.

The trustee said, "Jump Trading actively exploited the Terraform Labs ecosystem through manipulation, concealment, and self-dealing," and added, "It must be held accountable for the largest virtual asset (cryptocurrency) collapse in history that pushed thousands of innocent investors into bankruptcy."

Snyder said, "Jump Trading entered into private contracts with Terraform beginning in 2019 that gave it the right to buy LUNA at prices far below the market," noting, "Jump Trading was able to acquire LUNA at roughly $0.40 per token and sold when the market price exceeded $110, earning profits."

According to the complaint, Jump Trading entered into a series of secret contracts with Terraform Labs beginning in 2019. Through these, it obtained rights to purchase millions of LUNA tokens at prices far below the market, and the trustee alleges it bought them at $0.40 apiece when LUNA exceeded $110, leaving behind billions of dollars in profit.

He also raised suspicions that Jump may have intervened in price manipulation during the May 2021 depegging of TerraUSD (UST). Snyder pointed out, "Although Jump Trading secretly bought UST to prop up the price, Terraform deceived investors into thinking the algorithm had functioned normally and that prices had recovered."

The complaint also included that when the Terra-Luna crisis escalated in May 2022, roughly 50,000 bitcoins held by the Luna Foundation Guard (LFG) were transferred to Jump Trading without a separate written agreement.

Jump Trading strongly pushed back. A Jump Trading spokesperson said, "This is an attempt by Terraform Labs to shift responsibility for Do Kwon's crimes," and added, "We will vigorously defend against these baseless claims."