On Thursday, May 7, 2026, Zhewen Hu filed a complaint in the US District Court for the Northern District of Illinois against Jump Trading, LLC, Jump Crypto Holdings, LLC, Tai Mo Shan Ltd., Kanav Kariya, and William DiSomma, alleging violations arising from a fraudulent scheme to manipulate the market for Terraform Labs PTE Ltd.’s TerraUSD (UST) stablecoin and Luna token. Hu, a citizen of St. Kitts and Nevis, claims the defendants’ actions led to substantial losses on his $80 million investment in LUNA and UST.

The complaint alleges that the collapse of UST in 2022 caused significant losses for crypto investors, erasing approximately $2 trillion in digital asset value. UST, an algorithmic stablecoin, maintained its $1 peg through an arbitrage mechanism with its sister token, LUNA, rather than through asset backing. Terraform and its founder, Do Kwon, allegedly promised investors that one UST would always be redeemable for $1 in LUNA.

Hu’s lawsuit claims that Jump Trading and its affiliates artificially propped up and supported UST’s peg when its price dropped. In May 2021, when UST de-pegged and traded as low as $0.85, Jump allegedly intervened with secret purchases of over 62 million UST tokens to restore the $1 peg. This intervention manipulated the market, leading investors to believe the algorithm was responsible for restoring the peg.

The lawsuit further alleges that Jump and Terraform concealed Jump’s role in restoring UST’s peg and falsely claimed that the UST algorithm worked as designed. This concealment induced investors, including Hu, to continue investing in LUNA and UST. Hu claims that had he known about Jump’s secret purchases, he would not have invested in the tokens.

The complaint includes counts for violations of the Racketeer Influenced and Corrupt Organizations Act (RICO), conspiracy to violate RICO, violation of the Illinois Consumer Fraud Act (ICFA), fraudulent concealment, aiding and abetting common law fraud, fraudulent misrepresentation, and unjust enrichment. Hu seeks damages of no less than $500 million, along with treble damages, attorneys’ fees, and other relief.

The lawsuit highlights the close relationship between Jump and Terraform, noting that Jump acted as a market maker for the Terra ecosystem. In exchange for providing liquidity, Jump received a “loan” of 30 million LUNA with repayment prices ranging from $0.36 to $0.56 per token. Jump and Terraform also allegedly entered into a “gentleman’s agreement” to maintain UST’s peg.

The complaint details how Jump and Terraform concealed their communications through the use of the disappearing message app Signal. Jump executives allegedly instructed employees to use Signal for communications with Kwon, and Kariya asked Kwon to communicate exclusively through Signal.

The SEC previously charged Terraform and Kwon with orchestrating a “multi-billion dollar crypto asset securities fraud.” In June 2024, Terraform agreed to a $4.47 billion settlement. Kwon was arrested in Montenegro for using a fake passport and extradited to the United States. He pleaded guilty to fraud and is currently serving a 15-year prison sentence. Tai Mo Shan settled with the SEC in December 2024 for $123 million.

Please contact BlockTribune for access to a copy of this filing.