coinspress.com
The collapse of Terra is back in court. The administrator handling Terraform Labs’ liquidation has filed a $4 billion lawsuit against Jump Trading, accusing the market maker of engineering conditions that prolonged the Terra ecosystem and amplified losses when it ultimately failed.
The filing reframes Terra’s downfall not as a sudden breakdown, but as a system kept alive through undisclosed intervention.
Lawsuit Alleges Market Manipulation, Not Passive Trading
According to the complaint, Jump is accused of actively supporting TerraUSD (UST) during repeated de-pegging events. These actions allegedly created a false sense of stability by masking stress inside the algorithmic design. Investors, the suit claims, were led to believe the peg was recovering naturally.
The liquidator argues this delayed the inevitable collapse and encouraged new capital to enter a system already structurally unsound.
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
Preferential LUNA Access At The Core Of The Case
A central allegation involves confidential token agreements. Jump is accused of receiving LUNA at deeply discounted prices, far below public market levels. Court filings claim purchases occurred near $0.40, while LUNA later traded above $100.
The lawsuit argues this setup allowed Jump to profit from price appreciation that its own trading activity helped sustain, while retail participants took on increasing risk.
Profits Claimed To Reach $1 Billion
The liquidator estimates Jump generated around $1 billion from Terra-related activity. Those gains are framed as coming directly from a system that eventually wiped out roughly $40 billion in market value. The complaint characterizes Jump’s role as integral to extending the lifespan of a failing ecosystem.
Executives William DiSomma and Kanav Kariya are named individually. Both previously invoked Fifth Amendment protections during earlier regulatory inquiries.
Jump Pushes Back As Scrutiny Intensifies
Jump Trading has denied all allegations, calling the lawsuit unfounded. The firm says it will contest the claims aggressively. The case follows earlier regulatory action, including a $123 million SEC settlement by a Jump affiliate in 2024 related to Terraform dealings, reached without admitting wrongdoing.
The outcome could carry wide implications. At stake are questions about market maker responsibility, disclosure, and the boundary between liquidity provision and market distortion during periods of extreme stress.