Following the dramatic collapse of the stablecoin, Jump Trading has been accused of trying to manipulate the price of TerraUSD (UST).
Taewoo Kim, a resident of New Jersey, filed the action on behalf of the aggrieved investors, stating that Jump Trading bought large amounts of UST to manipulate its value toward $1 and deceive investors about the true cost of the token and the dangers involved.
The lawsuit asserted that the titan of Chicago trading collaborated with Do Kwon, the former CEO of Terraform Lab, to raise the price of UST.
Additionally, it mentioned Jump Trading as a former associate and benefactor of Terraform Labs’ finances.
TFL and Kwon conspired in secret with Defendant Jump to manipulate the market pricing for UST and aUST by engaging in covert, coordinated trades to keep UST at its promised peg price of $1 rather than openly admitting that TFL’s algorithm was unable to do so.
More specifically, the lawsuit claimed that between May 23 and May 27, 2021, Jump Trading bought more than 62 million tokens.
According to the lawsuit, the purchases were spread out among many cryptocurrency exchanges to conceal its deceptive practices better.
The Commodity Exchange Act, CFTC regulations, and common law unjust enrichment are all allegedly violated by Jump and its CEO Kanav Kariya, according to the lawsuit.
Through the strategy, Jump sold the deeply discounted LUNA tokens it had obtained through the modified agreement for an astounding profit of more than $1.28 billion.
“Plaintiff’s allegations are based upon personal knowledge as to himself and his own acts, and upon information and belief as to all other matters based upon the investigation conducted by and through Plaintiff’s attorneys,” the lawsuit stated.
It’s important to note that the SEC accused Terraform Labs and its CEO, Do Kwon, of seeking assistance from an undisclosed US trading business to manipulate the market price of UST in its legal case against the company.
According to Taewoo Kim’s lawsuit, the unknown company is Jump Trading.
Jump Trading to Scale Back Crypto Operations
According to reports, increased regulatory pressure is forcing Jump Trading’s cryptocurrency business, Jump Crypto, to scale back its digital asset trading operations in the US.
In the US, Jump Trading has come under regulatory scrutiny in the wake of the recent crypto crash that resulted in the demise of several well-known crypto companies.
While the company is still actively trading cryptocurrencies, it is now doing so on a much lesser scale. The business has no plans to give up on cryptocurrencies fully.
Kwon, detained in Montenegro in March, has since been freed on bail of 400,000 euros ($440,320), pending the outcome of his local charges.