Kwon Fails to Disclose $1B Deal with Jump Trading : SEC 

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Key takeaways:

  • According to court documents from the U.S. SEC, Jump Trading and Do Kwon made a covert agreement in 2021. 
  • A year before it crashed, Jump Trading was accused of supporting Terraform Labs’ TerraUSD stablecoin. 

The U.S. Securities and Exchange Commission (SEC) has filed a document in the U.S. District Court for the Southern District of New York targeting Jump Trading. The SEC claims that a supposed agreement took place between Terraform Labs, led by Do Kwon, and Jump Trading, a high-frequency quantitative trading firm based in Chicago. The agreement allegedly involved the manipulation of the TerraUSD (UST) stablecoin.

New case documents from the Securities and Exchange Commission (SEC) claim that Jump Trading, a high-frequency cryptocurrency trading firm, supported Do Kwon’s failing TerraUSD project a year before it crashed.

The SEC filings reveal that a year before the collapse of TerraUSD, Jump Trading made a significant cash injection into the project. This infusion of funds allowed the firm to purchase Luna tokens from Terraform Labs, the company behind TerraUSD, at various prices over three years.

As a result, Jump Trading reportedly reaped $1.28 billion from this arrangement. It is important to note that Jump Trading has not been implicated in any wrongdoing thus far. According to SEC court filings, Kwon confidentially revealed Jump’s investment in 2020 to investors in Terraform Labs, the entity backing TerraUSD.

An email outlined a three-year agreement with crypto-linked Jump affiliate Tai Mo Shan. LUNA’s price increased from $0.20 in 2020 to above $90 in 2022, allegedly earning Jump over $1 billion.

The documents identify Tai Mo Shan as a Chicago, Illinois-based Cayman Islands-exempted business.

A Cayman Islands-exempted company, according to Harneys, is one that was registered with the understanding that its “business operations are to be conducted primarily outside the Cayman Islands.” 

According to the fresh paperwork submitted on Friday, May 12, Tai Mo Shan and Terra signed a deal in 2019. 

Jump Trading’s involvement in assisting TerraUSD in maintaining its dollar pegs contradicts Do Kwon’s assertions regarding the stablecoin’s self-healing capability. The SEC has accused Kwon of making deceptive statements about the capabilities of the stablecoin’s underlying algorithm while withholding information from investors about undisclosed agreements that effectively supported TerraUSD.

Lawyers involved in the case have argued that the transactions resulting from Terra’s secret arrangement with Jump Trading constituted 6% of the overall UST purchases responsible for restoring the stablecoin’s peg to the US dollar.

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Aadrika Sharma
Aadrika Sharma

I enjoy writing and try to learn new things every passing day!

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