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- Taewoo Kim, a resident of New Jersey, initiated the lawsuit on behalf of affected investors.
- The complaint states that TFL participated in these actions by lending 30 million LUNA tokens to Jump.
A recent class action lawsuit has been initiated against Jump Trading, accusing the firm of manipulating the price of the algorithmic stablecoin UST by acquiring substantial quantities of the token to push its value closer to $1 while obscuring this activity from investors.
The class action asserts that investors who placed their funds into Terra-related cryptocurrencies suffered losses of at least $40 billion due to the involvement of the Chicago trading giant in a fraudulent scheme.
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Taewoo Kim, a New Jersey resident, filed the lawsuit on behalf of affected investors on May 9. Kim argues that Jump Trading was an early collaborator and financial supporter of Terraform Labs. Reportedly, several agreements were made between former Terraform CEO Do Kwon and Jump starting in November 2019.
False Market Demand
The complaint indicates that TFL was involved in these actions by lending 30 million LUNA tokens to Jump, enabling the latter to perform market-making functions for LUNA and UST. In return, Jump asserts it is entitled to compensation in the form of significantly discounted LUNA tokens.
On May 19, 2021, the price of UST unexpectedly fell below $1, dropping by 10%, approximately a year prior to Terra’s disastrous collapse, when it fell to zero.
The complaint alleges that on May 23 of the same year, Kwon and Jump conspired to elevate the price of UST and aUST (a token utilized on Terra’s lending platform, Anchor) by generating a false market demand for them. It is claimed that Jump executed this by secretly purchasing large amounts of UST, creating the illusion that UST was once again pegged to the dollar.
