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Breaking News: LINK Price Climbs Following Chainlink's Deal With US Commerce Department, Eyes $30

Jump Trading’s Covert Operations: How They Made $1.28 Billion From Terra Labs’ Downfall

Ronaldo Marquez
Ronaldo Marquez
2 years ago
3 mins read
Bitcoin crypto Terra

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According to recent court filings by the Securities and Exchange Commission (SEC), the Chicago-based firm Jump Trading LLC secretly propped up Terra (UST), the algorithmic stablecoin created by Do Kwon, a year before its eventual collapse. The Wall Street Journal reported on the findings, revealing that Jump Trading made a staggering $1.28 billion from the scheme.

Jump Trading is a Chicago-based global trading firm specializing in various financial products, including equities, futures, options, currencies, and cryptocurrencies. The company was founded in 1999 by a group of former pit traders and has since grown to become one of the largest trading firms in the world, with offices in Chicago, New York, London, Singapore, and Shanghai.

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The Dark Side Of Terra’s Collapse

The court filings shed light on the covert operations of Jump Trading, which allegedly used its trading power to prop up the UST project without any public disclosure. The stablecoin’s peg was artificially maintained, leading to a prolonged “Ponzi scheme” that eventually led to its downfall.

The SEC has now directly confirmed that Jump secretly bailed out the UST project, propping up the peg and prolonging the Ponzi without any public disclosure whatsoever. Jump made over $1b in profits through their dealings with TFL and Do Kwon. https://t.co/SGQwFBppoe

— FatMan (@FatManTerra) May 16, 2023

 

The filings also reveal the role of Do Kwon, the founder of Terra and UST, in the scheme. Kwon is accused of falsely claiming the project’s stability and performance, leading investors to pour money into the project. According to the Wall Street Journal, Kwon allegedly used the funds to prop up the UST peg, prolonging the Ponzi scheme and allowing Jump Trading to profit massively. 

Furthermore, the Chicago-based firm allegedly purchased over 62 million stablecoin tokens, pushing its price back to $1 and propping up the Ponzi scheme. The revelations raise questions about the transparency and integrity of the UST project.

Terra Labs And Jump Trading Under Scrutiny

Per the report, after the stablecoin’s recovery, Do Kwon touted the algorithm’s “self-healing” abilities and its ability to maintain a dollar peg through a code-enabled balancing act with sister cryptocurrency Luna. However, the court filings suggest that the recovery was due to Jump Trading’s covert operations rather than the algorithm’s inherent stability.

The report reveals that Jump Trading had a three-year loan agreement with Terraform Labs for 30 million Luna tokens with a 2% annualized interest payable in Luna tokens. The loan agreement was part of a larger deal that saw Terraform Labs receive a multimillion-dollar cash injection from Jump Trading in exchange for allowing the firm to buy Luna tokens for 30, 40, and 50 cents over three years. 

The court filings also include an email from Kwon to investors, in which he states that Terraform Labs had made an “important arrangement” with Jump Trading and asked investors to keep quiet about it. The revelations raise serious questions about the transparency and integrity of the UST project and the crypto industry.

Furthermore, Jump Trading has not been accused of wrongdoing about the UST project, although the firm is facing a class action lawsuit from an investor over its alleged role in propping up the stablecoin. The company has not commented on the allegations.

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BTC’s sideways price action on the 1-day chart. Source: BTCUSDT on TradingView.com

Featured image from Unsplash, a chart from TradingView.com

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Ronaldo Marquez
Ronaldo Marquez

Ronaldo Marquez

Ronaldo is an experienced crypto enthusiast dedicated to the nascent and ever-evolving industry. With over five years of extensive research and unwavering dedication, he has cultivated a profound interest in the world of cryptocurrencies.

Read more

Ronaldo's journey began with a spark of curiosity, which soon transformed into a deep passion for understanding the intricacies of this groundbreaking technology.

Driven by an insatiable thirst for knowledge, Ronaldo has delved into the depths of the crypto space, exploring its various facets, from blockchain fundamentals to market trends and investment strategies. His tireless exploration and commitment to staying up-to-date with the latest developments have granted him a unique perspective on the industry.

One of Ronaldo's defining areas of expertise lies in technical analysis. He firmly believes that studying charts and deciphering price movements provides valuable insights into the market. Ronaldo recognizes that patterns exist within the chaos of crypto charts, and by utilizing technical analysis tools and indicators, he can unlock hidden opportunities and make informed investment decisions. His dedication to mastering this analytical approach has allowed him to navigate the volatile crypto market with confidence and precision.

Ronaldo's commitment to his craft goes beyond personal gain. He is passionate about sharing his knowledge and insights with others, empowering them to make well-informed decisions in the crypto space. Ronaldo's writing is a testament to his dedication, providing readers with meaningful analysis and up-to-date news. He strives to offer a comprehensive understanding of the crypto industry, helping readers navigate its complexities and seize opportunities.

Outside of the crypto realm, Ronaldo enjoys indulging in other passions. As an avid sports fan, he finds joy in watching exhilarating sporting events, witnessing the triumphs and challenges of athletes pushing their limits. Furthermore, His passion for languages extends beyond mere communication; he aspires to master German, French, Italian, and Portuguese, in addition to his native Spanish. Recognizing the value of linguistic proficiency, Ronaldo aims to enhance his work prospects, personal relationships, and overall growth.

However, Ronaldo's aspirations extend far beyond language acquisition. He believes that the future of the crypto industry holds immense potential as a groundbreaking force in history. With unwavering conviction, he envisions a world where cryptocurrencies unlock financial freedom for all and become catalysts for societal development and growth. Ronaldo is determined to prepare himself for this transformative era, ensuring he is well-equipped to navigate the crypto landscape.

Ronaldo also recognizes the importance of maintaining a healthy body and mind, regularly hitting the gym to stay physically fit. He immerses himself in books and podcasts that inspire him to become the best version of himself, constantly seeking new ways to expand his horizons and knowledge.

With a genuine desire to become the best version of himself, Ronaldo is committed to continuous improvement. He sets personal goals, embraces challenges, and seeks opportunities for growth and self-reflection. Ultimately, combining his passion for cryptocurrencies, dedication to learning, and commitment to personal development, Ronaldo aims to go hand-in-hand with the exciting new era that the emerging crypto technology is bringing to the world and societies.

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Disclaimer: The information found on NewsBTC is for educational purposes only. It does not represent the opinions of NewsBTC on whether to buy, sell or hold any investments and naturally investing carries risks. You are advised to conduct your own research before making any investment decisions. Use information provided on this website entirely at your own risk.

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Reason to trust

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