Jump Trading Sued for $4B Over Alleged Role in Terra Collapse
Please note that we are not authorised to provide any investment advice. The content on this page is for information purposes only.
Jump Trading was recently hit with a $4 billion lawsuit due to allegedly having a role in the collapse of Terraform, Do Kwon’s crypto empire, according to a recent report by The Wall Street Journal.
The report, published December 18, says that the fallout from the collapse of the Terra ecosystem took an unexpected turn as the bankruptcy administrator for Terraform Labs filed a $4 billion lawsuit against Jump Trading and its top executives.
The legal action is led by the liquidator Todd Snyder, and it accuses the trading giant of market manipulation and profiting from a “secret agreement” that accelerated the destruction of the $40 billion crypto business.
The complaint was filed in a US District Court for the Northern District of Illinois, Eastern Division, and it says that Just Trading allegedly engaged in illicit market intervention to artificially boost the price of the UST stablecoin during the initial de-pegging in May 2021. Jump then secretly bought millions of tokens to restore the $1 peg, thus creating a false sense of stability that attracted billions in additional investments from unsuspecting institutional and retail investors, leading up to the final collapse in 2022, when the TerraUSD coin lost all of its value.
Jump Trade’s Back-Door Deals Brought Profits While Tricking The Public
The report cited Snyder’s statement in which he said: “Jump Trading actively exploited the Terraform Labs ecosystem through manipulation, concealment, and self-dealing that enriched Jump while financially devastating thousands of unsuspecting investors.”
He also explained that the lawsuit is a necessary step to hold Jump Trading accountable for illegal conduct that directly caused the largest crypto collapse in history.
The lawsuit is primarily focused on the undisclosed agreement between Do Kwon and Jump Crypto’s president, Kanav Kariya. The filing claims that, after Jump rescued the peg in 2021, Kwon modified its agreement with the firm to convey over 61.4 million LUNA tokens at a 99% discount from market prices as a reward for the firm coming to his aid.
This is what allowed Jump to collect a massive amount of assets, which they later sold in the market to make $1.28 billion in profits. The lawsuit also argued that this intervention was not an attempt to stabilize the market, but a predatory scheme designed to extract value while masking the system’s structural flaws.
Reports also say that Kariya invoked his Fifth Amendment rights multiple times during depositions for a separate SEC case when he was questioned about the details of back-door deals, which only served to further fuel the liquidator’s claims of an effort to deceive the public.
