Jump Trading Allegedly Supported Terra Before It Collapsed, New SEC Filings Show

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Sarah Wynn

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Sarah Wynn

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June 25, 2023

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A US regulator’s court filings confirm that Jump Trading secretly supported Terraform Labs — the company behind the failed algorithmic stablecoin — about a year before the company collapsed.

The Securities and Exchange Commission filed a document last week showing a contract between Terraform and a Chicago-based company called Tai Mo Shan Limited — with an email address linked to Jump Trading. 

The November 2019 contract specifies a loan of 30 million LUNA over three years between Terraform Labs and Tai Mo Shan Limited, according to the document. 

The document was signed by Terraform Labs CEO Do Kwon and someone representing Tai Mo Shan Limited, which other media outlets say is Terra’s subsidiary.

The Block first reported in February that Jump was the unnamed “US firm” in the SEC’s complaint against Kwon. 

The SEC’s allegations

The SEC charged Terraform Labs and Kwon in February for defrauding investors connected with the algorithmic stablecoin called TerraUST. 

Terraform Labs and Kwon “secretly discussed with a third party that the third party would purchase massive amounts of UST to restore the $1.00 peg,” the SEC said. 

The company and Kwon said the peg was restored due to decentralization, not mentioning that third party’s intervention. 

“When UST’s price went back up as a result of these efforts, defendants falsely and misleadingly represented to the public that UST’s algorithm had successfully re-pegged UST to the dollar, giving the investing public the false and misleading impression that the re-peg had occurred without human intervention and misleadingly omitting the real reason for the re-peg: intervention by the U.S. Trading Firm,” the SEC said in February.

Jump Trading did not immediately respond to a request for comment about the new court filing. 

TerraUST is an algorithmic stablecoin that uses market incentives through algorithms to maintain a stable price.
 

TerraUST had also been the largest algorithmic stablecoin before it crashed almost a year ago, causing billions to be wiped out.