Yeliz Akmaca 
Todd Snyder, the liquidator overseeing Terraform Labs, has filed a $4 billion lawsuit against high-frequency trading firm Jump Trading and its top executives. The case alleges that Jump secretly executed large-scale market interventions during multiple de-pegging events in 2021 and 2022 to support the TerraUSD (UST) stablecoin.
Snyder stated, “These actions misled investors and directly contributed to the largest crypto collapse in history.” The lawsuit, filed shortly after Do Kwon received a 15-year prison sentence, raises questions about the accountability of institutional players in the crypto market. Terraform Labs filed for bankruptcy in 2024 and settled with the SEC for $4.47 billion in penalties.
Jump Trading’s Market Interventions and Allegations
Court filings indicate that Jump Trading aggressively bought UST whenever the price fell below $1, attempting to maintain the peg. The liquidator claims these actions created a false sense of stability, hiding structural weaknesses in the Terra ecosystem. Jump reportedly profited around $1 billion and obtained LUNA tokens at preferential prices. Key allegations include:
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Exploiting UST price fluctuations for profit
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Gaining early access to tokens through secret agreements
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Misleading investors into believing the system was stable
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Leveraging corporate positions and liquidity advantages
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SEC reports show Jump’s Tai Mo Shan unit purchased $20 million UST in May 2021, generating $1.28 billion in gains
Jump Trading’s high-speed data processing and advanced high-frequency trading infrastructure amplified the market impact of its trades. The lawsuit also notes that Terra’s May 2022 collapse wiped out an estimated $40 billion in UST and LUNA, magnifying the damage from the prior illusion of stability.
SEC Findings and Tai Mo Shan Agreement
The U.S. Securities and Exchange Commission (SEC) revealed that Jump’s Tai Mo Shan unit bought $20 million worth of UST in May 2021 after the stablecoin briefly lost its dollar peg. Tai Mo Shan received unlocked LUNA tokens early, which it could sell on the market. The SEC claimed that Jump and Terraform misled investors about the stablecoin’s functionality, with Tai Mo Shan profiting $1.28 billion. The unit later agreed to pay around $123 million in fines.
A Jump spokesperson described the lawsuit as a “desperate attempt to shift blame from Terraform and Kwon” and stated the company intends to vigorously defend itself.
Impact on the Crypto Market
The case highlights the responsibility boundaries of market makers and the importance of transparency in crypto markets. A ruling in favor of Terraform Labs could increase disclosure and investor protection requirements for institutional trading firms. It may also improve compensation for affected investors and lead to a re-evaluation of risk management and reliability of algorithmic stablecoins. Snyder emphasized, “This action is a necessary step to hold Jump Trading accountable for illegal conduct.” Jump Trading has not publicly responded but is expected to mount a strong defense.
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