The Quest for Accountability: Terraform Labs Pursues $4 Billion Claim Against Jump Trading and Key Executives Including Kanav Kariya

Scope of the Lawsuit and Key Figures Involved

A major legal development has emerged in the ongoing efforts to recover losses from the Terra ecosystem’s catastrophic 2022 collapse. Todd Snyder, the court-appointed liquidation manager for Terraform Labs, has initiated a substantial $4 billion legal action targeting Jump Trading, company co-founder William DiSomma, and former president Kanav Kariya, who departed the organization in 2024. The lawsuit represents an aggressive push to hold third parties accountable for their involvement in what many consider the most significant collapse in cryptocurrency history.

Allegations of Market Manipulation and Unlawful Conduct

At the heart of Snyder’s case is the assertion that Jump Trading engaged in systematic exploitation of the Terraform Labs system through questionable market practices. According to court documents reviewed by major financial outlets, Jump Trading is accused of orchestrating backdoor arrangements designed to artificially bolster confidence in TerraUSD’s stability mechanism. These alleged schemes created a false narrative regarding the stablecoin’s functionality, ultimately deceiving market participants about the legitimacy of the underlying technology.

The financial rewards from these activities were substantial. Jump Trading allegedly accumulated billions in gains through these arrangements before the ecosystem unraveled. Snyder’s legal team contends that these unlawful activities directly precipitated the ecosystem’s downfall, which subsequently erased more than $40 billion in market capitalization when Luna’s value collapsed alongside TerraUSD’s loss of its dollar peg.

Regulatory Findings and Supporting Evidence

The legal allegations against Jump Trading align closely with conclusions drawn by the U.S. Securities and Exchange Commission following its own investigation. The SEC uncovered that Tai Mo Shan, Jump’s cryptocurrency division, intervened in May 2021 by purchasing approximately $20 million worth of TerraUSD during a brief destabilization event. In exchange for this market support, the entity received newly issued Luna tokens ahead of regular distribution schedules.

The regulator’s analysis revealed the profitability of this transaction: Tai Mo Shan generated substantial returns by liquidating these early-release Luna coins at market prices. The SEC quantified the gains from this single arrangement at $1.28 billion. More significantly, the regulatory body concluded that this intervention bolstered the false perception that TerraUSD’s mechanism was functioning as designed, thereby misleading investors about the stablecoin’s structural integrity.

Consequences and Ongoing Recovery Efforts

The collapse cascaded rapidly following the inevitable failure of the algorithm-based stabilization model under Do Kwon’s leadership. Terraform Labs filed for bankruptcy protection in 2024, and subsequently negotiated a comprehensive settlement framework with the SEC totaling $4.47 billion in penalties and compensation commitments. As part of regulatory enforcement, Tai Mo Shan accepted a separate settlement involving a $123 million financial penalty.

The current liquidation process, overseen by Snyder, has accumulated approximately $300 million in recoverable assets to date. These funds are intended to distribute to affected creditors once legal determinations are finalized. Jump Trading has dismissed the lawsuit as a “desperate attempt” to deflect accountability from Terraform’s leadership and Kwon himself, signaling an intent to mount a vigorous defense.

In parallel developments, Do Kwon accepted criminal charges in August and received a 15-year federal prison sentence, marking a significant consequence for the ecosystem’s primary architect. The legal proceedings against Jump Trading and its former executives, including Kanav Kariya, represent the next phase in the broader accountability effort surrounding one of digital assets’ most damaging episodes.