Cryptocurrency News & Updates

$1.28B lawsuit against Jump Trading over TerraUSD & Luna price manipulation

Court documents claimed that Jump Trading violated several laws, as the company manipulated Terra’s token prices & also secured nearly $1.28 billion profit.

Luna coin & TerraUSD stablecoin were two native tokens on the Terra blockchain. Both of these two tokens collapsed badly, in May 2022. According to Terraform Labs, an engineering team behind the Terra blockchain, there was a protocol between the Luna token & TerraUSD stablecoin, to maintain the value of TerraUSD stablecoin at exactly $1. 

On 9 May 2023, Plaintiff Taewoo Kim filed a document in the court against Jump Trading firm to disclose the fraud that Terraform project team & this firm did with Terra token investors.

According to the submitted court document, Jump Trading was purchasing & selling  TerraUSD against Luna, under an agreement to maintain the value of TerraUSD exactly pegged to $1. That means there was no protocol between the two tokens. 

“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.” Court document read.

Plaintiff alleged that Jump Trading purchased a huge amount of TerraUSD stablecoin in May 2022, to push the price of TerraUSD equal to $1 & also succeeded. After that incident, the agreement between the Jump Trading & Terraform project team changed, under which Jump Trading received a huge amount of Luna coins at a discount price of 99%.

According to the plaintiff’s allegations, Jump Trading sold those big amounts of Luna coins in the crypto market & & made nearly $1.28 billion net profit. 

Under all these price manipulation & hidden activities, Jump Trading violated securities law, commodities laws, & also other common law unjust enrichment.

It is worth it to note that the headquarters of this 700 workers’ firm Jump Trading is in NewYork, which means it will be very challenging for the company to handle the case also already the United States Securities and Exchange Commission (SEC) initiated fraud charges against Terraform Labs & its founders for misleading information about the Terra crypto empire. 

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