On Wednesday, October 7, 2026, Jump Trading, LLC, Jump Crypto Holdings LLC, and Tai Mo Shan Limited (TMSL) filed a formal answer in federal court in San Jose, California, denying the central allegations in a securities class action tied to the 2022 collapse of the Terra ecosystem.
The 80-page filing, submitted to the U.S. District Court for the Northern District of California, responds to the Fourth Amended Class Action Complaint in Patterson v. Jump Trading LLC et al., Case No. 5:22-cv-03600. U.S. District Judge P. Casey Pitts is presiding. The complaint, dated October 31, 2025, also names Kanav Kariya and William DiSomma as defendants. Kobre & Kim LLP represents the three Jump entities.
Plaintiff Nick Patterson sued on behalf of a proposed class of investors. The suit alleges the defendants took part in a scheme involving the TerraUSD stablecoin (UST) and its sister token, LUNA. The Jump entities denied any participation in the alleged scheme or securities violations. They also denied that the plaintiffs are entitled to any relief, and they acknowledged that the plaintiffs have demanded a jury trial.
The companies conceded several facts. They said UST’s price fell below $1 in May 2021 before returning to roughly $1, and that TMSL bought UST between May 23 and May 27, 2021, including while the token traded under its dollar peg. They also said UST and LUNA prices dropped in May 2022.
The filing states that Kariya’s Signal records show five calls with Terra founder Do Kwon on May 23, 2021. It adds that Kariya, who headed the Jump Crypto business unit, communicated with Kwon during the UST depeg that month. It also states that DiSomma, a Jump Trading Group co-founder and one of the ultimate beneficial owners of Jump Trading, LLC, made certain decisions on TMSL’s trading of UST at times, including May 2021.
The defendants described their corporate structure in detail. Jump Trading Group, they said, is not a legal entity but a group of affiliated independent entities. Jump Trading, LLC is a Delaware limited liability company and SEC-registered broker-dealer with an office in Chicago. Jump Crypto Holdings LLC is a Delaware holding company that does not trade cryptocurrencies, they said, and is not the Jump Crypto business unit announced on September 14, 2021. TMSL, they said, is a Cayman Islands entity and an indirect, wholly owned subsidiary of Jump Crypto Holdings.
The filing acknowledged a Securities and Exchange Commission cease-and-desist order against TMSL, noting that TMSL neither admitted nor denied the agency’s findings. It also referenced the SEC’s case against Terraform Labs, including Judge Jed Rakoff’s summary judgment ruling and the jury verdict, as well as the criminal case against Kwon, including his plea. In each instance, the defendants said the records speak for themselves and denied any characterization inconsistent with them.
The defendants acknowledged a 2022 hack of the Wormhole bridge, after which one or more Jump Trading Group entities deposited their own digital assets to replace the stolen funds. They also said certain Jump entities submitted occasional governance proposals concerning the Terra ecosystem.
The answer lists 37 affirmative defenses. The defendants argue that Terra tokens were not securities, that the claims do not involve domestic securities transactions as required under the Supreme Court’s decision in Morrison v. National Australia Bank, and that they were not statutory sellers of the tokens.
They contend that their trading did not create an artificial price and that they lacked intent and the ability to do so. They also say external market factors and the actions of others caused the plaintiffs’ losses, that the claims are time-barred, and that the case does not qualify for class certification.
The Jump entities further say Jump Trading, LLC and Jump Crypto Holdings LLC are not control persons of TMSL, and that none of the three controlled Terraform Labs, Kwon, or the Luna Foundation Guard. They assert that each Jump entity is a separate legal entity and that a valid arbitration agreement applies to the dispute.
Please contact BlockTribune for access to a copy of this filing
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