Jump Trading Is Facing A Lawsuit Worth $1.3 Billion

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Jump Trading

A lawsuit has been filed in a district court in Illinois that details the alleged involvement of Jump Trading with Terraform Labs in manipulating the price of TerraUSD, a failed algorithmic stablecoin. According to the court documents from 9th May, the firm did end up purchasing millions of UST Tokens in 2021, wherein they were hoping to manipulate its value to reach a sum of $1. Taewoo Kim, the plaintiff, has been accusing Jump, and Kanav Kariay, its CEO, of violating the Commodity Exchange Act, the regulations of the Commodity Futures Trading Commission, and of common law unjust enrichment. 

Jump Trading Has Been Accused Of Violating Several SEC Laws

According to this lawsuit, Jump Trading was one of the earliest partners, as well as a primary financial backer of Terraform Labs. Between November 2019, and September 2020, the company entered into multiple agreements with Terraform and the affiliates in order to borrow tens of millions of LUNA tokens from Terra, whilst providing market-making services for transactions in LUNA, UST, and aUST.

In exchange, the agreements would also grant the company the opportunity to purchase the tokens of LUNA at a far steeper discount, which would then be resold into the market to further their own profit.

On 13th March, Bloomberg went on to report that the prosecutors in the country were reportedly examining a chat group discussion on Telegram that involved Alameda Research, Jump Trading, and Jane Street Group which involved a potential TerraUSD stablecoin bailout.

The Justice Department in the United States has also started investigating the stablecoin collapse, which contributed immensely to a $40 billion wipeout in the Terra ecosystem in May 2022. Two of the agencies in the department- the US Attorney’s Office for the Southern District of New York, and the Federal Bureau of Investigation, have already started interrogating former staff at Terraform Labs.