Court documents recently filed by the Securities and Exchange Commission (SEC) reveal Jump Trading’s alleged involvement in manipulating the price of TerraUSD (UST) in 2021. According to these documents, a secret agreement was reached between Do Kwon, founder of Terraform Labs, and Jump Trading, with the aim of artificially inflating the price of UST by spending millions of dollars to massively buy USTs.
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UST price was repeg artificially in 2021
Recent court documents filed by the United States Securities and Exchange Commission (SEC) show that the company Jump Trading would have actively participated in the repeg of the price of TerraUSD (UST) in May 2021a year before its final collapse.
A secret agreement would thus have been concluded between Do Kwon, the founder of Terraform Labs, and the company specializing in algorithmic and high-frequency trading in order to raise the price of the UST to its theoretical anchor of one dollar.
Jump Trading would thus have spent tens of millions of dollars to massively buy USTs and drive up the price of the stablecoin artificially and not algorithmically, contrary to a statement by Do Kwon who used repeg to show how the UST “ healed itself naturally “.
A heavy lie, which adds to the already well-filled file of Do Kwon, who already risks 40 years of imprisonment in South Korea if he were to be found guilty of the financial crimes of which he is accused on his native land. The latter is currently awaiting his trial in Montenegro, the date of which has been set for June 16aimed at determining whether or not he will serve a sentence for falsifying identity documents.
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Do Kwon lawyers defend Terraform
In response to these SEC allegations, Do Kwon’s attorneys responded – without denying them – that Jump Trading’s actions at that time did not accounted for only 6% of the total transactions contributing to the UST repeg.
And yet, this agreement would have been essential, in view of the efforts made by Do Kwon to conclude it. Moreover, the latter would have expressly asked Terraform Labs investors to keep it confidentialwhile only mentioning a ” important agreement reached with Jump Trading “.
In exchange for this capital contribution, Do Kwon would have promised Jump Trading purchase options for the UST at preferential rates of 30, 40 and 50 cents over the following 3 years. The SEC also revealed a document aimed at modifying the initial agreement between the 2 parties, in particular in order to stipulate the commitment of Terraform Labs to deliver 61.5 million LUNA tokens to Jump Trading.
Through these transactions, which have therefore only been revealed very recently, Jump Trading will have had time to make more than a billion dollars in profit before the Terra ecosystem collapsed.
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Passionate about the world of decentralized finance and the novelties brought by Web 3.0, I write articles for Cryptoast to help make blockchain more accessible to everyone. Convinced that cryptocurrencies will change the future very soon.
Maximilien Prue
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