A lawsuit filed in an Illinois district court alleges Jump Trading’s illicit involvement with Terraform Labs in manipulating the price of failed algorithmic stablecoin TerraUSD (UST).

Court documents filed on May 9 states that the firm, which focuses on algorithmic and high-frequency trading strategies, purchased millions of UST tokens back in 2021, allegedly in efforts to manipulate its value to hit the $1 mark.

In alleged violation of the Commodity Exchange Act, Commodity Futures Trading Commission (CFTC) regulations, and common law unjust enrichment, Plaintiff Taewoo Kim has filed a lawsuit against the Jump Trading entity and its CEO, Kanav Kariya.

The lawsuit states that Jump Trading was a devoted partner and primary financial backer of the infamous Terraform Labs for several years, claiming that Jump Trading intertwined with several agreements with Terraform and its affiliates “to borrow tens of millions of [Terra] LUNA tokens” from Terra and “provide market-making services for transactions in LUNA, UST and aUST.“

According to the filing, the UST stablecoin failed to retain its $1 peg in May 2021, just one year prior to the collapse of Terra’s ecosystem which witnessed the price of Terra Luna hammered into oblivion, which led to the coordination between Terraform and its CEO Do Kwon in trading activity to propel the token price.

The filing claims that the illicit price manipulation involved Terra and Kwon to agree to “modify the parties’ prior agreements and instead unconditionally convey to Jump more than 61.4 million LUNA tokens at a greater than 99% discount from their then-current market price. Jump later resold those LUNA tokens into the market at a staggering profit of over $1.28 billion.”

Sources:

https://cointelegraph.com/news/jump-trading-faces-lawsuit-over-alleged-1-3b-profit-from-terrausd

https://www.scribd.com/document/644577737/Taewoo-Kim-et-al-v-Jump-Trading#