Jump Trading is the masked “American trading company” that the US Securities and Exchange Commission (SEC) accused of supporting TerraUSD, UST and preventing the stablecoin from depegging in 2021. reports on the February 17 show.
On February 16, the SEC filed charges against Terraform Labs, the developer of TerraUSD and LUNA, as well as the company’s CEO, Do Kwon. One of the allegations in the complaint is that the defendants misled investors by stating that they would use a “US trading company” to back the value of TerraUSD in May 2021. Instead, based on comments made by the individuals, that company was Jump Trading.
The SEC has not filed charges against Jump Trading or accused the company of engaging in illegal activities. However, the US regulator claims that Jump Trading made around $1.28 billion from this transaction.
What is happening on Terra?
TerraUSD, the stablecoin most often referenced by its UST ticker, failed in May 2022, resulting in tens of billions of dollars worth of losses to invest. The claim that Terraform employed human traders to prop up the algorithmic stablecoin rather than the software algorithm it said supported the system is at the center of this lawsuit.
According to the SEC’s complaint, in May 2021, when the UST was “decoupled” from the value of the US dollar, Terraform, through Kwon, covertly discussed agreements with a third party, the “US commercial business”, to acquire substantial amounts of of UST to restore its value.
Defendants fraudulently and misleadingly asserted that UST’s algorithm had successfully re-pegged UST to the dollar when the price of UST rose again due to these efforts, the lawsuit states.
Where does Jump come in?
The decoupling in May 2021 occurred four months before Jump Crypto was formally introduced to the public.
Since about November 2019, the SEC has accused Terraform of collaborating with an unidentified commercial company. In exchange for remuneration, the company acted as a market maker for LUNA and TerraUSD, with the latter coin often being paid for at a discount to LUNA’s spot price.
The SEC claims that Terraform improved the terms of the deal after the trading business stepped in to support TerraUSD in May 2021. So regardless of whether LUNA was trading at $90 or $0.40, the trading business would consistently get them at a lowest price.
The SEC has accused Terraform Labs and Kwon of taking billions of dollars from investors by trading and selling an interconnected pool of crypto asset securities, many in off-the-record transactions.” This is in addition to charges related to termination of TerraUSD. The SEC defined “mAssets” as security-based exchanges that are intended to generate returns by tracking the value of TerraUSD and shares of US companies.
