One of the events that marked the crypto money market in 2022 was undoubtedly the collapse of the Terra ecosystem. However, the destruction caused by Terra continues this year. There are heavy allegations against both Terra executives and related organizations. Jump Trading is accused of manipulating LUNA-UST prices in a $1.3 billion lawsuit.
Did Jump Trading manipulate LUNA-UST?
A class action lawsuit accused Jump Trading of making $1.3 billion by manipulating the price of the LUNA-UST. The lawsuit alleges that Jump Trading played a supporting role in a scam scheme involving Terra. Further, the lawsuit claims that it caused at least $4 billion in losses to the crypto investors involved.
Taewoo Kim, a New Jersey resident, filed the lawsuit on behalf of the affected investors. Kim points out that Jump Trading is the first partner and financial backer of Terraform Labs. Meanwhile, negotiations between Do Kwon and Jump Trading are believed to have led to a series of deals. According to the lawsuit, Terraform Labs loaned Jump Trading 30 million LUNA as part of this. Thus, he allowed Jump to be LUNA and UST to be Market Maker. In return, Jump was entitled to compensation, including getting LUNA at a substantial discount.
Then the value of UST experienced a sudden drop. As you follow on Kriptokoin.com, on May 19, 2021, it fell below $ 1, down 10% compared to about a year before the Terra explosion. The lawsuit alleges that soon after, on May 23, 2021, Do Kwon and Jump Trading conspired to artificially inflate the prices of UST and aUST (a token used on Terra lending platform Anchor).
The lawsuit highlights the risks associated with the cryptocurrency market
The lawsuit also states that Jump Trading participated in significant net purchases of more than 62 million UST tokens from May 23 to May 27, 2021. Allegedly, Jump conducted transactions across multiple cryptocurrency trading platforms to hide its manipulation.
Terraform Labs has agreed to transfer 61.4 million LUNA to Jump at a flat price of $0.4 per LUNA token, as part of an agreement signed in July 2021 to compensate Jump’s allegations of UST and AUST manipulation. This deal will be valid for the next four years regardless of LUNA’s actual market value. Allegedly, as a result of this plan, Jump sold discounted LUNA tokens they had purchased through the modified deal. Thus, it made a staggering profit of over $1.28 billion. As of now, a Jump Trading spokesperson has not responded to this lawsuit.
This case highlights the risks associated with the cryptocurrency market, particularly the susceptibility to price manipulation. As cryptocurrencies continue to grow in popularity and value, it is crucial that regulators and investors remain vigilant to ensure the integrity and stability of this emerging asset class.
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