According to the documents, the company purchased millions of UST tokens in 2021, hoping to manipulate their value.
Jump Trading and its CEO Kanav Kariya are accused of violating the law on the operation of commodity exchanges, as well as unlawful enrichment.
Jump Trading was an early partner and primary financial backer of Terraform Labs.
Between November 2019 and September 2020, the company entered into several agreements with Terraform Labs and its affiliates “to borrow tens of millions of LUNA tokens from Terra and provide market-making services for transactions in LUNA, UST and aUST.”
In return, Terraform Labs was giving Jump Trading “the opportunity to purchase LUNA tokens at a deep discount, which could then be resold in the marketplace to increase Jump Trading’s own profits.”
According to the filing, in May 2021 – exactly one year before Terraform Labs collapsed – the UST stablecoin algorithm failed to maintain its peg to the dollar, prompting Terraform Labs and its CEO, Do Kwon, to try to support the token price.
The scheme involved Jump Trading buying more than 62 million UST tokens between May 23 and May 27, 2021, which artificially raised the price of UST to $1 and raised the price of aUST.
Jump Trading recently announced it would cease operations in the U.S. market amid regulatory pressure. The company said they still plan to expand internationally.
Meanwhile, a Montenegrin court has allowed the release from custody of Do Kwon, who the country’s authorities accuse of document fraud.
The U.S. and South Korea are filing multiple fraud charges against Do Kwon for his alleged role in the Terra collapse last spring.