$4 Billion Lawsuit Claims Jump Trading Helped Engineer Terraform’s Collapse

Core Viewpoint - Terraform Labs has filed a $4 billion lawsuit against Jump Trading, accusing the firm of manipulating prices and contributing to the collapse of the Terra ecosystem, following Do Kwon's sentencing for orchestrating a $40 billion crypto fraud [1][6]. Group 1: Lawsuit Details - The lawsuit names Jump Trading, its co-founder William DiSomma, and former head of its crypto division, Kanav Kariya, alleging unlawful profiteering related to the failure of TerraUSD (UST) [2]. - The complaint claims that Jump Trading conducted undisclosed, large-scale trading interventions to support UST during de-pegging events in 2021 and 2022 [2][3]. Group 2: Allegations of Market Manipulation - The administrator argues that Jump's actions created a false sense of market confidence, masking structural weaknesses that exacerbated Terra's collapse [3]. - Jump allegedly purchased UST aggressively whenever it fell below its $1 peg, inflating demand and misleading market participants about the peg mechanism's functionality [3][4]. Group 3: Financial Gains and Impact - The filing claims that Jump earned approximately $1 billion through these strategies, benefiting from preferential token arrangements and trading advantages while retail investors remained unaware of the support [4]. - The lawsuit asserts that the illusion of stability created by Jump's actions magnified the damage when Terra ultimately collapsed in May 2022, leading to an estimated $40 billion loss across UST and LUNA [5].