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SEC unveils Jump Trading’s secret deal; to probe Do Kwon and TerraUSD

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Jump Trading, a Chicago-based trading enterprise, has been accused of secretly offering assistance to the now-defunct crypto stablecoin TerraUSD (UST). According to court filings by the Securities and Exchange Commission that disclosed Jump’s assistance, the firm became involved a year before the collapse and made up to $1 billion in profits.

Do Kwon’s failed TerraUSD (UST) had ties with the trading giant, which led to the purchase of over 62 million of the stablecoin. The purchase impacted the price of the stablecoin, setting it back to its depegged $1 in May 2021.

Do Kwon, CEO of Terra and co-founder of Terraform Labs, the firm behind the stablecoin, affirmed that the recovery was self-induced and underwent a code-enabled balancing act with sister cryptocurrency Luna.

Additionally, Jump’s profits were accumulated by acquiring Luna tokens over the course of three years, at 30, 40, and 50 cents, as part of Terraform Labs’ efforts to stabilize UST’s peg. The SEC recently filed a complaint alleging Kwon and Terraform Labs of fraudulent activity and selling unregistered securities. 

In February, the Securities and Exchange Commission issued a filing that led to the unveiling that the U.S. trading giant, Jump was the unnamed firm in the Terraform Labs lawsuit.

Jump Trading has not been dragged for any wrong, however, the firm and its crypto president Kanav Kariya were issued a class action lawsuit by an investor for earning from its assistance to Terra.

A document released by SEC detailed a contract from November 2019 stating that Terraform Labs and Jump subsidiary Tai Mo Shan Limited had a three-year loan agreement for 30 million Luna tokens with a 2% annualized interest which would also be payable in Luna tokens. Moreover, in another document, the SEC mentioned that Kwon sent an email to investors saying Terraform Labs had made an “important arrangement” with Jump Trading.

Do Kwon awaits trial in Montenegro after attempting to use a forged Costa Rican passport, while Jump’s digital assets trading unit is seeking to move operations from the U.S. due to increased regulatory scrutiny.

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