In February, the U.S. Securities and Exchange Commission (SEC) filed a lawsuit against Terraform Labs and its founder Do Kwon. The complaint alleged that Terraform Labs and Kwon defrauded investors and made several false representations over the algorithmic stablecoin TerraUSD (UST).
That same complaint also referenced an unnamed U.S. trading firm that allegedly helped support UST during its de-pegging from the U.S. dollar in 2021. At the time, sources told The Block that the trading firm in question was none other than Jump Trading, a well-known market maker in the crypto industry.
According to a Monday report from the Wall Street Journal, court filings from the SEC made late on Friday confirm that Jump was indeed the unnamed entity that made over $1 billion in profit from its side deal with Kwon.
In a motion opposing Kwon’s motion to dismiss the lawsuit, the SEC argued that its amended complaint more than sufficiently pleads the case that Terraform Labs and its founder engaged in fraud.
While the motion refers to the U.S. Trading firm as the entity contracted by Terraform to improve liquidity in exchange for 30 million LUNA tokens, the regulator does not mention Jump by name. Still, market participants believe that there is sufficient evidence that points to Jump, particularly in light of another lawsuit that makes the same allegations against the firm.
In a May 9 class action complaint, lead plaintiff Taewoo Kim alleged that Jump and Terra manipulated the market for UST and covered up its inability to hold its peg to the dollar.
In exchange for using coordinated trades to prop up UST, Jump was offered the option to purchase LUNA at a 99% discount.
“Jump later resold those LUNA tokens into the market at a staggering profit of over $1.28 billion,” stated the complaint.