Physical Address
304 North Cardinal St.
Dorchester Center, MA 02124
The officer responsible for the liquidation of Terraform Labs has filed a $4 billion lawsuit against high-frequency trading company Jump Trading. They accused the market marker of secret price manipulation and contributed to the collapse of the dominant cryptocurrency system Docoin.
This comes less than a week after the judge issued Du Quan his decision, a federal prison sentence of 15 years for organizing a $40 billion crypto fraud.
Sponsored
Sponsored
Terraform Labs seeks $4 billion from Jump Trading
The complaint names Jump Trading co-founder William De Somma and its former head of cryptocurrency, Kanav Kariya. The call says that illegal profits have been made With the bankruptcy of TerraUSD (UST).
Based on court filings, reported The Wall Street Journal Terraform Labs’ estate alleges that Jump made extensive undisclosed business interventions to support UST during several separation episodes in 2021 and 2022.
Instead of stabilizing the system, the manager argues that these actions create a false sense of market confidence. In turn, this mask structural weakness that made the collapse of Earth more severe.
At the heart of the lawsuit is the allegation that Jump aggressively bought UST whenever the price of the algorithmic stablecoin fell. At less than one value. These purchases allegedly artificially increased demand, misleading market participants into believing that the stabilization mechanism was working as designed.
The estate argues that Jump did not act as a neutral liquidity provider. Instead, he leveraged his market position and insider knowledge to extract profits Fluctuations That I helped manage.
The filings state that Jump made about $1 billion through these strategies, taking advantage of tokenization arrangements and business advantages. Meanwhile, individual investors were unaware of the support emerging behind the scenes.
by the time Terra disbanded in May 2022causing an estimated $40 billion collapse in UST and LUNA, the suit claims the previous illusion of stability increased the damages.
Sponsored
Sponsored
It should be noted that this is not the first time that Jump Trading has been linked to accusations of manipulation. In October 2024, the game development company presented FractureLabs sued Against Jump Trading on cryptocurrency manipulation allegations
“Jump systematically liquidated his holdings in DIO, generating millions of dollars in revenue for himself,” reported Bloomberg, citing an excerpt from the lawsuit.
Du Quan’s decision sheds new light on the market power of Jump Trading
The legal action comes amid renewed headlines about Earth’s collapse. This comes later Du Quan’s last sentence was 15 years in prison Due to fraud charges related to the project.
In the days following that decision, some market observers openly speculated that additional institutional players could face legal exposure, with Whale Calls citing Jump Trading.
Sponsored
Sponsored
Beyond the immediate allegations, the case highlights Jump Trading’s vast technological capabilities.
The technological advantage of Jump Trading and its role in the cause
Jump is widely considered one of the most advanced high-frequency trading companies in the world. Industry reports have highlighted its willingness to spend huge sums to gain marginal speed advantages, including the purchase of a microwave tower previously used by NATO to reduce transit times of transatlantic trade by milliseconds.
In 2018, Jump also teamed up with companies like Citadel to build the Go West undersea fiber optic cable, which will connect Chicago and Tokyo and provide faster access to future global markets.
Second To comment Colleen Wu, Jump’s capabilities to process citation data are very different from many competitors. This reflects the unequal power that large trading firms can have in traditional and cryptocurrency markets.
Sponsored
Sponsored
This technological aspect is now part of the wider context of the process. While the complaint does not allege illegal infrastructure use, it alleges that JMP’s size and complexity increased the influence of its UST trades in the market. This raises questions about fairness, disclosure and market integrity.
If successful, the case could have far-reaching ramifications. A ruling in favor of Terraform Labs’ estate may establish clearer legal boundaries between legitimate market making and manipulation in the cryptocurrency markets, potentially reshaping the way large trading firms operate.
This could also translate into significant fines, as any funds recovered will likely go to compensate creditors and victims of the collapse of Earth.
Jump Trading has not publicly commented on the lawsuit at press time, but is expected to present a strong defense.
As the discovery continues, the case can offer rare insights into the mechanics of the mysterious industry of the cryptocurrency market. Far from it, it may represent a watershed moment in the industry’s ongoing confrontation with responsibility.
