Jump Trading, a Chicago-based trading giant, has been accused in a recent lawsuit of conspiring to manipulate the price of TerraUSD (UST), a stablecoin that collapsed earlier this year. The suit, filed by New Jersey resident Taewoo Kim on behalf of affected investors, claims that Jump Trading acquired large amounts of UST in collaboration with Terraform Lab’s then-CEO, Do Kwon, to manipulate the token’s value closer to $1 in order to mislead investors about its actual price and associated risks.
According to the lawsuit, when Terraform Labs realized that their algorithm couldn’t maintain UST’s pegged price, they secretly conspired with Jump Trading to manipulate the market prices of the stablecoin. The lawsuit alleges that Jump Trading purchased over 62 million tokens between May 23 and 27, 2021, across multiple cryptocurrency exchanges to better cover their tracks.
These actions reportedly resulted in Jump making a considerable profit of over $1.28 billion by selling discounted LUNA tokens acquired through a modified agreement. The plaintiff accuses Jump and its CEO, Kanav Kariya, of violating both the Commodity Exchange Act and the Commodity Futures Trading Commission (CFTC) regulations, as well as engaging in unjust enrichment under common law.
This lawsuit follows the SEC’s legal filing against Terraform Labs and CEO Do Kwon, which alleges that they sought assistance from an unnamed US trading firm to manipulate the market price of UST. Speculation within the lawsuit suggests that Jump Trading may be that unnamed firm.
Interestingly, Jump Crypto, the digital asset trading division of Jump Trading, is reported to be scaling back its activities in the US amidst increasing regulatory pressure. Jump Trading has found itself under scrutiny in the United States after a series of high-profile cryptocurrency company implosions. While the firm continues to operate in the crypto market, it does so on a smaller scale and has no plans to abandon the sector entirely.
In a separate development, Do Kwon, who was arrested in Montenegro back in March, has been released from jail on a bail of 400,000 euros ($440,320), pending trial on local charges.
This lawsuit against Jump Trading raises questions about market manipulation and the role of prominent players within the cryptocurrency sector. It highlights the need for clearer regulations and increased oversight, as well as raising awareness among investors about the potential risks associated with emerging digital assets.
Source: Cryptonews
