Market Analysis Report (20 Feb 2023)

Last week, when US regulators sued Do Kwon and Terraform Labs over the implosion of TerraUSD (UST), an unnamed trading partner that booked $1.28 billion in profits before Terra’s collapse was named. People familiar with the matter now say that the firm is Jump Crypto.

Chicago-based Jump Crypto is a company whose parent has deep roots in conventional finance, and has become a giant in the digital asset sector.

The U.S. Securities and Exchange Commission (SEC) has charged Singapore-based firm Terraform Labs and its CEO, Do Kwon, with “orchestrating a multi-billion dollar crypto asset securities fraud involving an algorithmic stablecoin and other crypto asset securities.”

The SEC’s complaint refers to an unnamed trading firm that had made an exclusive market-making agreement with Terraform Labs. The company, which sources identify as Jump Crypto, was able to buy heavily discounted LUNA tokens.

It deployed only $62 million to help keep UST’s price near $1 in May 2021, but managed to make $1.28 billion by selling off discounted tokens that it purchased. Jump Crypto played an active role in the Terra ecosystem, often submitting governance proposals and having significant investments in the project.

The firm was involved in the creation of a Terra cross-chain bridge and co-led a $1 billion capital raise to establish the Luna Foundation Guard. Kanav Kariya, President of Jump Crypto, also served on the board of the Luna Foundation Guard, which oversaw Terra’s multi-billion-dollar bitcoin reserve treasury.

The reserve was deployed in May 2022 in an unsuccessful attempt to restore UST’s peg.

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• Source: https://www.cryptocompare.com/email-updates/daily/2023/feb/20/