Uncovering Jump Trading’s Secret Support of Failed TerraUST: A Lesson in Transparency

Intricate chess board with cryptocurrency tokens, shadowy figures shaking hands behind the chess board, TerraUST stablecoin crumbling in the background, mood of mystery and deception, soft chiaroscuro lighting, Renaissance-style painting, dominating tones of blue and gray, indication of controversy and unseen connections, sense of caution for crypto industry.

A recent revelation from the US Securities and Exchange Commission (SEC) has confirmed that Jump Trading secretly supported Terraform Labs — the company behind the failed algorithmic stablecoin TerraUST — about a year before the company collapsed. The SEC’s court filings showcase a contract between Terraform and a Chicago-based company called Tai Mo Shan Limited, which has an email address linked to Jump Trading. The contract from November 2019 specifies a loan of 30 million LUNA over three years between Terraform Labs and Tai Mo Shan Limited.

The document was signed by Terraform Labs CEO Do Kwon and a representative of Tai Mo Shan Limited, believed to be Terra’s subsidiary. This information was first disclosed by The Block in February, identifying Jump Trading as the unnamed “US firm” in the SEC’s complaint against Kwon.

The SEC charged Terraform Labs and Kwon for defrauding investors connected with TerraUST. The allegations state that Terraform Labs and Kwon “secretly discussed with a third party that the third party would purchase massive amounts of UST to restore the $1.00 peg.” The company and Kwon claimed that the peg was restored due to decentralization and did not mention the third party’s intervention.

According to the SEC’s statement in February, “When UST’s price went back up as a result of these efforts, defendants falsely and misleadingly represented to the public that UST’s algorithm had successfully re-pegged UST to the dollar, giving the investing public the false and misleading impression that the re-peg had occurred without human intervention and misleadingly omitting the real reason for the re-peg: intervention by the U.S. Trading Firm.” Jump Trading did not immediately respond to a request for comment about the new court filing.

It is important to note that TerraUST is an algorithmic stablecoin that employs market incentives through algorithms to maintain a stable price. Before its collapse nearly a year ago, TerraUST was the largest algorithmic stablecoin, and its downfall resulted in billions being wiped out.

While the recent findings shed light on the involvement of Jump Trading in supporting Terraform Labs, the overarching implications of the disclosed information raise questions about the integrity and transparency of certain industry practices. The situation reflects the necessity for greater oversight and regulation in the rapidly expanding crypto landscape.

Source: Cryptonews

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