LUNA +5.05% Amid Terraform Legal Fallout and Market Volatility

On DEC 19 2025, LUNA rose by 5.05% within 24 hours to reach $0.1117. Over the past week, the token dropped by 29.04%, while showing a strong 55.68% increase over the past 30 days. However, it remains down 72.9% from its value a year ago, indicating a market still grappling with the legacy of Terraform’s collapse.

Terraform Collapse Investigation Intensifies

The administrator overseeing the liquidation of Terraform Labs has filed a $4 billion lawsuit against Jump Trading, accusing the Chicago-based firm of directly contributing to the 2022 collapse of Terraform and the subsequent market disaster. Todd Snyder, the appointed plan administrator, claims that Jump profited billions from the collapse through a series of secret agreements and manipulative actions.

According to court documents, Jump had the right to purchase LUNA tokens at $0.40, even as market prices surged to $110. The firm also entered into an informal agreement to artificially support the TerraUSD stablecoin’s peg to the dollar. These actions were concealed to avoid regulatory scrutiny and public backlash.

Secret Deals Alleged to Have Worsened Crisis

The lawsuit outlines a series of actions taken by Jump Trading that allegedly exacerbated the Terraform ecosystem’s instability. In May 2021, TerraUSD briefly lost its peg to the dollar, but Jump reportedly propped it up through secret purchases. The firm then misleadingly attributed the recovery to the algorithm’s efficacy.

Following this event, Jump negotiated to remove vesting requirements in its contracts, enabling the firm to sell LUNA tokens freely and accelerate the token’s decline. The lawsuit also accuses Jump of facilitating the formation of the Luna Foundation Guard, which later transferred nearly 50,000 Bitcoin without written agreements.

Legal and Market Repercussions

The legal action against Jump could have far-reaching implications for liquidity providers and governance in digital asset markets. If proven, the allegations may prompt regulators to impose stricter oversight on market manipulations and opaque agreements within the crypto space.

This comes as Terraform’s co-founder, Do Kwon, was recently sentenced to 15 years in prison for his role in the 2022 collapse. Meanwhile, Jump’s subsidiary, Tai Mo Shan, settled a separate $123 million claim in December 2024 relating to its dealings with Terraform in 2021.

The legal battle has reignited industry-wide debates about accountability in crypto trading ecosystems and the need for greater transparency. Analysts project that the case could influence risk management practices for high-frequency traders and shape future regulatory frameworks in digital asset markets.