Terraform Labs’ bankruptcy trustee has sued popular proprietary trading firm Jump Trading for allegedly benefiting from and contributing to the crypto company’s 2022 collapse, the Wall Street Journal reported on December 18.
Launched in 2018, Terraform Labs was one of the leading crypto companies a few years ago.
But the project’s twin cryptocurrencies, TerraUSD (UST) and LUNA, collapsed in 2022 and even caused investors losses worth an estimated $40 billion.
Related: 15-Year Prison Sentence May Not Be Enough for Chapter 11 Crypto Founder
Terraform Labs founder Do Kwon was arrested by Montenegrin authorities while trying to flee to Dubai in March 2023.
After his extradition to the United States, the court found him guilty of nine charges, including fraud and money laundering, and recently sentenced him to 15 years in prison and asked him to forfeit ill-gotten gains worth $19 million.
Even South Korean authorities could start a separate trial against Do Kwon and he could reportedly receive additional punishment in the country.
As for Terraform Labs, the crypto company filed for Chapter 11 bankruptcy in the US in January 2024. The company received court approval in September 2024 to close its operations in the event of bankruptcy.
The court appointed Todd Snyder as Terraform Labs’ bankruptcy plan administrator. It is a court-appointed role that involves managing a company’s finances during bankruptcy to ensure the process is fair, legal and orderly.
According to the WSJ report, Snyder sued Jump Trading, co-founder William DiSomma, and former president Kanav Kariya in the US District Court for the Northern District of Illinois, Eastern Division, on December 18.
Snyder held Jump accountable for alleged market manipulation, self-dealing, and misuse of assets so that the proprietary trading company could enrich itself and let cryptocurrency investors take the losses.