Jump Trading Hit With $4B Lawsuit as Terra Estate Hunts ‘Secret’ Profits

Terraform Labs’ bankruptcy estate filed a $4 billion lawsuit against Jump Trading Thursday, alleging the firm’s “secret deals” with Do Kwon fueled the $40 billion collapse of the Terra ecosystem.

The complaint, lodged in the U.S. District Court for the Northern District of Illinois by Plan Administrator Todd Snyder, comes just one week after Kwon was sentenced to 15 years in federal prison. While Kwon faces jail time, the estate is now targeting the institutional machinery that allegedly legitimized his fraud.

The “Gentleman’s Agreement”

The filing accuses Jump of acting not as a neutral market maker, but as a complicit partner. Central to the claim is the May 2021 depeg event, a precursor to the 2022 implosion. The estate alleges Jump covertly purchased millions of UST to restore its dollar peg, creating a false signal of algorithmic stability that deceived investors.

In exchange, Jump reportedly secured a modified agreement allowing it to acquire LUNA tokens at a roughly 99% discount. The sheer scale of the arbitrage is detailed in the complaint:

Jump purchased LUNA tokens at approximately $0.40 while the market price traded above $90, generating over $1.28 billion in profits.

Individual Liability

The lawsuit breaks the corporate veil, naming Jump co-founder William DiSomma and former Jump Crypto President Kanav Kariya as defendants. The filing notes that Kariya, who resigned in mid-2024, repeatedly invoked his Fifth Amendment rights during prior SEC depositions regarding these specific trades.

This civil action seeks to claw back what the estate terms “unjust enrichment,” dwarfing the $123 million settlement Jump’s subsidiary, Tai Mo Shan Ltd., paid to the SEC in late 2024 to resolve similar charges.