Terraform Bankruptcy Administrator Alleges Market Manipulation Linked to $50 Billion Crypto Crash
Trading firm Jump Trading has been hit with a $4 billion lawsuit connected to the dramatic collapse of the Terra blockchain ecosystem, one of the largest failures in crypto history. The legal action was filed by the bankruptcy administrator of Terraform Labs, seeking to recover losses for creditors and investors impacted by the 2022 meltdown.
The lawsuit accuses Jump Trading and senior executives of market manipulation, self-dealing, and unlawful profit-taking that allegedly worsened the Terra collapse. It names the firm’s co-founder and a former senior executive, claiming they played a central role in propping up TerraUSD (UST) while privately benefiting from the system’s flaws.
At the heart of the case is the allegation that Jump gained access to millions of LUNA tokens at steep discounts, at times purchasing them for around $0.40 while market prices exceeded $100. In return, Jump was allegedly expected to support UST’s dollar peg, masking weaknesses in the algorithmic stablecoin design.
According to the filing, these arrangements were allegedly kept informal and undisclosed to avoid regulatory scrutiny. The lawsuit further claims that Jump publicly attributed UST’s temporary recovery to Terra’s algorithm, without revealing its own trading activity that may have stabilized prices.
The complaint also alleges that nearly 50,000 Bitcoin from Terra’s reserve funds were transferred to Jump without a formal written agreement, raising questions about oversight and governance.
This is not the first lawsuit tied to Jump’s Terra involvement. Previous cases and regulatory investigations have raised similar claims of price manipulation and misleading conduct. Jump Trading has denied wrongdoing, setting the stage for a high-stakes legal battle with major implications for crypto market accountability.
Disclaimer
This content is for informational purposes only and does not constitute financial, investment, or legal advice. Cryptocurrency trading involves risk and may result in financial loss.