Terraform Labs has initiated a lawsuit against Jump Trading, demanding $4 billion in response to allegations of market manipulation and undisclosed agreements related to the collapse of the Terra ecosystem.

The complaint, filed by court-appointed administrator Todd Snyder, asserts that Jump Trading profited from TerraUSD’s instability while investors faced significant losses. Snyder claims that the trading firm misrepresented its dealings and took advantage of the situation by engaging in manipulation and deceitful practices.

Case Insights
According to a report from The Wall Street Journal, the lawsuit was lodged in the U.S. District Court for the Northern District of Illinois. It alleges that Jump Trading amassed around $1 billion in profits through sales of Luna, Terra’s sister token, while the entire ecosystem crumbled.

Snyder accused Jump of exploiting partnerships to purchase Luna tokens at prices drastically lower than market value— as low as 40 cents— and reselling them for over $110. Furthermore, the lawsuit claims Jump played a crucial role in attempting to keep TerraUSD’s peg to the dollar stable through undisclosed agreements.

In May 2021, the stablecoin briefly fell below its dollar peg, with Jump purportedly intervening but falsely attributing the recovery to Terra’s algorithm. The claims escalate as former president Kariya and DiSomma are cited in the lawsuit as pivotal to Jump’s alleged exploitations.

Jump Trading’s Response
Jump Trading has categorically denied these allegations, asserting that the lawsuit is a misguided effort by Terraform Labs to divert attention from the actions of its founder, Do Kwon.

Terraform’s operational failures in 2022 earned it global criticism, culminating in a loss of approximately $40 billion. Following this, Terraform filed for bankruptcy and recently settled with the SEC for roughly $4.5 billion, while Do Kwon has also been sentenced to 15 years in prison for his role in the collapse.