Judge permits Terraform use of Jump documents, denies 4 claims

A Delaware bankruptcy judge on July 8 authorized Terraform Labs’ plan administrator to use documents reproduced from Jump Trading in a civil lawsuit filed in Illinois that seeks at least $4 billion. In a separate order, the court denied four late-filed crypto-loss claims.

Bankruptcy Judge Brendan L. Shannon found the administrator had violated the existing protective order by using what the court called “Jump Reproduced Documents” in the Illinois action. Shannon modified the protective order to permit use of those documents in the Illinois case, including in an amended complaint.

The modification took effect immediately. The order did not direct the removal of confidentiality markings or rule on whether the materials should be made public; Shannon left those questions to the court handling the Illinois litigation. The certification was filed July 8 as Docket 1276 and the signed order was entered July 9 as Docket 1281.

The plan administrator’s complaint alleges Jump entered a secret arrangement to support the TerraUSD stablecoin and received about $1.5 billion in Bitcoin reserves without written agreements or proper oversight. The complaint seeks at least $4 billion in recovery. Those allegations have not been adjudicated.

Jump Trading opposed the modification, arguing the reproduced materials were provided under limits that allowed use only in the bankruptcy case. The firm said allowing use in Illinois could permit the administrator to bypass a discovery stay in related securities litigation and risk disclosing competitively sensitive information. Shannon’s order authorized use but did not resolve confidentiality designations.

In a separate ruling the court denied motions from four named individuals who sought permission to file crypto-loss claims after the bankruptcy claims deadline. The order directed Kroll, the claims agent, to update the claims register to reflect those denials.

The plan administrator reports about 16,640 submitted crypto-loss claims. Submitted claims are not the same as allowed claims; only allowed claims will be eligible to share in any distributions from the bankruptcy estate. The denials applied to the four named filings and did not state that every late claimant is barred. Determinations on many submitted claims continue on a rolling basis.

The rulings permit the administrator to use the reproduced Jump materials in the Illinois suit but do not resolve whether Jump owes damages, whether the materials support the allegations, or what recoveries, if any, creditors may receive. Those issues remain subject to further proceedings in Delaware and Illinois.