Jump Trading accused of buying over 62M UST tokens to inflate its price.
Jump Trading Group’s crypto division has been sued for conspiring with Terraform Labs to manipulate TerraUSD’s (UST) price following the stablecoin’s unprecedented collapse. The $1.3 billion class-action lawsuit alleges that Jump bought 62 million UST tokens to propel its price back up.
Jump Trading Allegedly Bought UST to Recover its Dollar Peg
Jump Trading, a US-based firm focused on algorithmic and high-frequency trading strategies, is facing a $1.3 billion class-action lawsuit over allegations that it had manipulated the price of the collapsed UST token. The lawsuit was filed on behalf of affected investors by Taewoo Kim, a New Jersey resident who claims that Jump Trading was also an early partner of Terraform Labs, the blockchain project behind UST.
In the lawsuit, Kim alleges that shortly after the UST collapse in May 2021, Jump Trading and Terraform Lab’s then-CEO Do Kwon conspired to manipulate the prices of UST and aUST stablecoins artificially. To achieve this, Jump bought UST tokens, temporarily restoring UST’s price to the $1 peg, which previously dropped to as low as 12 cents.
Specifically, the lawsuit states that from May 23 to May 27, 2021, Jump Trading acquired more than 62 million tokens. The purchases were made across several crypto exchanges to hide its manipulative actions better, Kim says in the document.
In addition, Kwon’s Terraform Labs then agreed to transfer 61.4 million LUNA tokens to Jump at a fixed price of $0.40 per coin under the terms of an agreement signed in July 2021. The deal was supposed to remain in effect for the following four years without regard to LUNA’s actual market price.
Kwon is to Be Released on $435K Bail in Montenegro
The crash of UST and LUNA erased around $60 billion from the digital currency space, and the event is seen as one of the biggest frauds in the crypto industry, alongside the FTX fiasco. Not long after the collapse, Kwon went missing, and his location remained unknown until his arrest in Montenegro in March 2023.
Last month, the 31-year-old was charged by authorities in Montenegro for passport forgery. Today, on May 12, reports revealed that Kwon would be released from Montenegro jail on supervised bail, according to a court notice. His lawyers paid 400,000 euros ($435,000) to bail him out.
Meanwhile, Jump Trading’s crypto arm is scaling its operations in the US, citing recent regulatory uncertainty, as reported by Bloomberg on Wednesday. While the trading firm plans to dial back its crypto activities, it will not exit crypto entirely.
—
Originally Posted May 12, 2023 – Jump Trading Hit with $1.3B Lawsuit for Terra Manipulation
Disclosure: Tim Fries has no positions in any of the stocks mentioned, and has no plans to initiate any positions within the 72 hours following the publishing of this article. This article expresses the opinions of Tim Fries. Tokenist Media LLC has no position in any of the stocks mentioned, and does not plan to initiate any positions within 72 hours of the publishing of this article. Please consult our website policy for more information.
Disclosure: The Tokenist
Neither the author, Tim Fries, nor this website, The Tokenist, provide financial advice. Please consult a licensed financial advisor prior to making financial decisions.
Disclosure: Interactive Brokers
Information posted on IBKR Campus that is provided by third-parties does NOT constitute a recommendation that you should contract for the services of that third party. Third-party participants who contribute to IBKR Campus are independent of Interactive Brokers and Interactive Brokers does not make any representations or warranties concerning the services offered, their past or future performance, or the accuracy of the information provided by the third party. Past performance is no guarantee of future results.
This material is from The Tokenist and is being posted with its permission. The views expressed in this material are solely those of the author and/or The Tokenist and Interactive Brokers is not endorsing or recommending any investment or trading discussed in the material. This material is not and should not be construed as an offer to buy or sell any security. It should not be construed as research or investment advice or a recommendation to buy, sell or hold any security or commodity. This material does not and is not intended to take into account the particular financial conditions, investment objectives or requirements of individual customers. Before acting on this material, you should consider whether it is suitable for your particular circumstances and, as necessary, seek professional advice.
Disclosure: Bitcoin Futures
TRADING IN BITCOIN FUTURES IS ESPECIALLY RISKY AND IS ONLY FOR CLIENTS WITH A HIGH RISK TOLERANCE AND THE FINANCIAL ABILITY TO SUSTAIN LOSSES. More information about the risk of trading Bitcoin products can be found on the IBKR website. If you're new to bitcoin, or futures in general, see Introduction to Bitcoin Futures.
Join The Conversation
If you have a general question, it may already be covered in our FAQs. If you have an account-specific question or concern, please reach out to Client Services.