The latest report revealed that Jump Trading was recently slammed with a lawsuit for allegedly manipulating the price of TerraUSD (UST) after the stablecoin suddenly collapsed. The case sought to fine Jump Trading about $1.3 billion.
According to the report, Taewoo Kim, a crypto investor based in New Jersey has sued Jump Trading firm for allegedly conspiring with Terra Labs to manipulate the price of UST before its abrupt collapse. He reportedly has the backing of other affected investors.
As per the plaintiff’s filing, the manipulation occurred shortly after Terraform Labs started having insolvency issues in November last year. He alleged that the defendant conspired with the Terra platform and bought a massive amount of UST.
As a result of their action, UST, which had previously deppeged, gained back its $1 value. Consequently, investors were deceived and confused about the actual price of the stablecoin token, misleading them to buy more.
Terraform Labs, Do Kwon, and Jump Trading Jointly Manipulated UST Price
In the lawsuit, the plaintiff pointed out that Jump Trading was one of the partners and financial supporters of the Terra platform before it collapsed. Hence, instead of publicly admitting the condition of the platform when it was going bankrupt, they all contrived to hide it from the public.
According to Taewoo Kim, the inability of the platform to maintain the value of its UST pegged at $1 led it to conspire with Do Kwon, its CEO, and Jump Trading. The trio executed some secret trades which deceitfully boosted the price of the stablecoin to its $1 peg again.
The lawsuit highlighted that the Chicago-based trading giant Jump Trading bought a massive quantity of UST worth about 62 million between May 23 and 27 in, 2021. In addition, the transactions were reportedly executed on different exchanges to obscure their manipulative actions.
The lawsuit accused Kanav Kariya, the CEO of Jump Trading, of violating the regulations of the Commodity Futures Trading Commission and the Commodity Exchange Act. The plaintiff said the defendant was guilty of unlawful enrichment as it made massive money from its manipulative act.
The trading firm reported making about $1.29 billion from the sales of the LUNA tokens it bought at a discounted price and reselling to the public at a high rate.
Jump Trading Remains In US Crypto Market Despite Rehulators’ Pressure
According to the lawsuit, the complainant’s accusations were based on his knowledge of the case and the information related to the case as received from different sources through the plaintiff’s lawyers’ research.
Furthermore, it is worth pointing out that the US Securities and Exchange Commission stated a similar complaint in its lawsuit against Terraform Labs and Do Kwon. The regulator highlighted that they manipulated the price of UST with the help of an unrecognized US trading firm.
Taewoo Kim has established via its recent court filing that the US trading firm the SEC didn’t name was Jump Trading.
The stringent regulatory framework the US regulators enforce on firms offering crypto-related services is forcing many crypto platforms out of business in the country. One of the affected firms was Jump Trading.
Due to increased pressure from the US regulators, Jump Trading is reportedly set to minimize its crypto trading services in its Jump Crypto branch. Despite the strict rules, the firm is not ready to stop its trading activities.
The giant trading firm is still actively trading the US crypto market. However, since the regulators started enforcing the stringent laws, the firm’s trading scale has drastically reduced compared with what it used to be before.