Securities and Exchange Commission court filings have confirmed that crypto trading firm Jump Trading Do Kwon backed failed algorithmic stablecoin TerraUSD (UST) a year before its collapse.
By purchasing more than 62 million stablecoin tokens, the Chicago-based firm pushed the algorithmic stablecoin’s price back to $1 after it lost its peg in May 2021, court filings show. Later, Kwon, CEO of Terra and co-founder of Terraform Labs, announced the recovery Proof of the self-healing abilities of the stablecoin algorithm and its ability to maintain a dollar peg through a code-powered balancing act with sister cryptocurrency Luna.
The SEC had previously disclosed in his complaint against Terraform Labs and Kwon that an unnamed third-party trading partner had benefited greatly from keeping the Terra stablecoin from the abyss. Citing unnamed sources, The Block first reported in February that was the third jump.
A year before Terra collapsed in a crypto-bank run of sorts with its algorithmic stablecoin, it received a multimillion-dollar funding injection, and in exchange, Terraform Labs, the company behind the Terra stablecoin, agreed to launch Jump Trading Luna- Let tokens buy 30, 40 and 50 cents over a three-year period.
That agreement netted Jump $1.28 billion, according to an SEC complaint alleging that Kwon and Terraform Labs engaged in securities fraud and the sale of unregistered securities. Jump Trading has not been accused of any wrongdoing. An investor earlier this month filed a class action lawsuit against Jump Trading and Jump Crypto President Kanav Kariya the company’s role in profiting from supporting Terra.
Recent SEC court filings include a November 2019 contract governing a three-year loan agreement between Terraform Labs and Jump subsidiary Tai Mo Shan Limited for 30 million Luna tokens with an annual interest rate of 2%, also denominated in Luna tokens is to be paid.
Another document released by the SEC includes an email Kwon sent to investors that said Terraform Labs had reached a “material agreement” with Jump and that the company had asked them not to disclose it. according to the Wall Street Journall.
Kwon is currently out on bail in Montenegro, where he is awaiting trial on charges of attempting to use a fake Costa Rican passport. Both the United States and South Korea are seeking his extradition.
Jump did not immediately respond to a request for comment from wealth. Jump Crypto, the digital asset trading entity, is planning international expansion and an exit from U.S. markets amid recent heightened regulatory pressure, according to Bloomberg.
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