Todd R. Snyder, acting as Plan Administrator for the jointly administered estates of Terraform Labs Pte. Ltd., Terraform Labs Limited, and the Wind Down Trust created under Terraform’s Chapter 11 bankruptcy plan confirmed in June 2024, has filed a major civil lawsuit.
The action is brought on behalf of Terraform’s creditors and individual victims harmed by the May 2022 collapse of the Terra ecosystem, including the algorithmic stablecoin UST (TerraUSD) and its companion token Luna (now Luna Classic).
The defendants include Jump Trading, LLC and multiple affiliated entities—such as Jump Crypto Holdings, Jump Financial, Jump Capital, Jump Operations, Tai Mo Shan Ltd., J Digital 6 Cayman Ltd., and JCDP-7QP LLC—as well as individuals Kanav Kariya (former president of Jump Crypto) and William DiSomma (co-founder and managing member of Jump Financial). The complaint seeks a jury trial and aims to recover billions of dollars in alleged unlawful profits.
The filing alleges that Jump and its executives engaged in fraud, market manipulation, and unjust enrichment through secret arrangements with Terraform Labs and co-founder Do Kwon dating back to 2019.
Key Allegations
• Secret Agreements: Jump allegedly acted as a market maker for UST and Luna in exchange for options to purchase tens of millions of Luna tokens at heavily discounted prices (as low as $0.40), while market prices later ranged from $40 to $116. These arrangements allegedly enabled Jump to generate billions in profits while artificially supporting the appearance of stability in the Terra ecosystem.
• May 2021 UST Depeg: When UST briefly lost its $1 peg in May 2021, Jump is accused of secretly intervening through manipulative trading to restore the peg. This intervention allegedly misled investors into believing the algorithmic mechanism worked organically, concealing systemic risks.
• Luna Foundation Guard (LFG): The lawsuit claims Jump helped shape the creation of the Luna Foundation Guard in 2021, which was presented as independent but allegedly controlled by Do Kwon and Jump insiders. LFG allegedly served as a vehicle to funnel assets—including Luna tokens, options, and later Bitcoin—for private benefit. These reserves were later used unsuccessfully to defend UST.
• May 2022 Collapse: During the final depeg in May 2022, Jump allegedly participated in deploying more than $1 billion in LFG assets, including Bitcoin linked to Jump. These efforts failed, and Terra’s market capitalization collapsed from over $45 billion to near zero. The complaint alleges Jump profited from its positions while continuing to misrepresent the stability of the system.
• Broader Market Manipulation: The filing alleges violations of federal securities and commodities laws, including claims that UST and Luna were unregistered securities. It further accuses Jump of wash trading, spoofing, price manipulation, and using affiliated entities to commingle funds and avoid arm’s-length transactions.
Legal Claims and Relief Sought
The lawsuit asserts violations of: • The Securities Exchange Act of 1934 (Sections 9, 10(b), 20A; Rule 10b-5)
• The Securities Act of 1933 (Section 15)
• The Commodity Exchange Act (Sections 6(c)(1), 9(a)(2), 22)
• CFTC Rule 180.1
• Bankruptcy jurisdiction under 28 U.S.C. §1331
The plaintiff seeks compensatory damages, disgorgement of profits (including proceeds related to Jump’s $123 million SEC settlement reached in December 2024), punitive damages, and other equitable relief. The claims cover investors listed in Exhibit A who traded UST or Luna between May 23, 2021, and May 31, 2022.
The complaint argues that Terra was marketed as a stable financial system but ultimately collapsed due to inherent structural flaws that were allegedly intensified by covert manipulation.
This lawsuit follows Terraform’s bankruptcy proceedings and prior enforcement actions by the SEC against Terraform Labs and Do Kwon, who pleaded guilty to fraud charges and was sentenced to 15 years in prison in 2024. Although Jump settled with the SEC without admitting wrongdoing, this civil action seeks further accountability on behalf of harmed investors.
