Spread of blame for Terra's crash... US Jump Trading faces a 50 trillion won lawsuit bomb

The bankruptcy trustee of Terraform Labs, which went bankrupt due to the cryptocurrency Terra·Luna’s plunge, has filed a damages claim against a US trading company involving tens of trillions of Korean won. The legal battle over the scope of responsibility for the incident has officially begun.

According to the Northern District Court of Illinois in the United States on December 19, 2025, Todd Snyder, the bankruptcy trustee representing the liquidation of Terraform Labs, filed a lawsuit demanding at least $40 billion (approximately 59 trillion Korean won) in damages against Chicago-based high-frequency trading firm Jump Trading and its co-founders.

This lawsuit is expected to go beyond a simple trading dispute and become a key point in clarifying the fundamental responsibility for the Terra·Luna crash that occurred in 2022. Trustee Snyder questions whether Jump Trading gained improper profits during the trading of Terraform Labs’ issued cryptocurrencies Terra and Luna, and whether it played a decisive role in the assets’ collapse. Specifically, the core of the claim is that Jump Trading misled the market at certain times through artificial price support.

In fact, Taimoshan, a subsidiary of Jump Trading, reportedly bought large amounts of Terra when its value fell below a certain baseline in May 2021, as a temporary price defense. This move was seen as a market stabilization measure at the time, but it is now believed to have masked the structural vulnerabilities of Terra, an algorithmic stablecoin, and created a false sense of stability, leading to controversy.

Subsequently, in May 2022, the value of Terra and Luna collapsed simultaneously, causing over $40 billion (about 59 trillion Korean won) in losses in the cryptocurrency market, resulting in significant losses for individual investors worldwide. Terraform Labs’ co-founder and former CEO Do Kwon claimed that this price defense was the result of autonomous algorithm operation. However, after it was confirmed that the action was influenced by external intervention, he was indicted by U.S. federal prosecutors on fraud charges and recently sentenced to 15 years in prison.

Meanwhile, Terraform Labs filed for bankruptcy protection with the U.S. bankruptcy court in January 2023 and entered formal liquidation in September of the same year. The U.S. Securities and Exchange Commission (SEC) filed a civil lawsuit against Terraform Labs, which resulted in the company agreeing to pay approximately $4.47 billion (about 6.6 trillion Korean won) in restitution and fines. Taimoshan, a subsidiary of Jump Trading, was also accused of earning about 1.5 trillion Korean won and reached an agreement with the SEC in December 2023, paying a fine of $123 million (about 1.8 billion Korean won).

This damages lawsuit appears to be an important opportunity to reevaluate the responsibility structure of the cryptocurrency market following the Terra incident. For bankruptcy creditors seeking financial recovery, this could be an excellent chance to increase recovery potential. At the same time, the roles and ethical standards of market professionals such as high-frequency trading firms will also face scrutiny.