Jump Trading accused of making $1.3 billion profit from Terra crypto
As reported by Cointelegraph, a lawsuit was made against Jump Trading as it was accused of involvement with Terra Labs for controlling the price of TerraUSD (UST), an algorithmic stablecoin, stated Cointelegraph. Reportedly, on May 9, 2021, the company bought millions of UST tokens expecting the value to reach one dollar.
It is believed that Plaintiff Taewoo Kim blamed Kanav Kariya, CEO, Jump Trading, for violating the Commodity Exchange Act and the Commodity Futures Trading Commission (CFTC) regulations. It also broke the common law of unjust enrichment, added Cointelegraph.
Sources revealed that earlier Jump Trading partner had collaborated with the primary financial backer of Terraform Labs. It is expected that in between November 2019 and September 2020, Jump made several agreements with Terraform and its affiliates “to borrow tens of millions of LUNA tokens” from Terra and “provide market-making services for transactions in LUNA, UST and aUST,” Cointelegraph highlighted.
With insight from the complaint “Rather than publicly acknowledging the inability of TFL’s algorithm to maintain UST’s advertised peg price (which was fundamental to the perceived market value of UST and aUST), TFL and Kwon secretly schemed with Defendant Jump to manipulate the market prices for UST and aUST by making secret, coordinated trades to prop up UST to its $1 peg.” Furthermore, Jump Trading did not provide any further response regarding the complaint, Cointelegraph concluded.
(With insights from Cointelegraph)