Terraform Labs has launched a $4 billion lawsuit against trading firm Jump Trading and its top executives, alleging that they manipulated the Terra ecosystem for illegal profits during the crash that happened in 2022, as reported by the Wall Street Journal.

The lawsuit indicates that Jump Trading exploited the Terraform ecosystem and was involved in unethical practices. Among those named in the lawsuit are co-founder William DiSomma and former crypto trading president Kanav Kariya. The claims arise from the dramatic fall of the algorithmic stablecoin TerraUSD (UST), which was backed by a mechanism that eventually faltered, resulting in approximately $50 billion in losses.

Snyder, representing Terraform’s bankruptcy efforts, alleged that Jump took advantage of the situation through self-serving manipulations. As of now, Jump Trading has yet to respond to inquiries from Cointelegraph, although they have historically denied such allegations.

Allegations of Secret Deals

Reports indicate that the lawsuit also hints at alleged clandestine agreements between Jump and Terraform, where Jump was reportedly allowed to purchase LUNA tokens at significantly reduced prices with a commitment to maintain UST’s stability, further obscuring the internal failings.

This lawsuit is not Jump Trading’s only legal battle concerning Terra, as previous allegations have emerged claiming price manipulation scenarios involving TerraUSD. Notably, Kariya stepped down amid regulatory scrutiny, and further investigations by the SEC have occurred, forcing Jump’s subsidiary to settle for a substantial amount earlier this year.

For further information, you can read related articles discussing the complexities and risks surrounding stablecoins and institutional actions in these markets.