Jump Trading Crypto Subsidiary Fined $123M Over TerraUSD Scandal.
Jump Trading’s crypto arm, Tai Mo Shan Ltd., has agreed to pay a $123 million fine to settle allegations by the SEC that it misled investors during TerraUSD’s collapse. According to the SEC, the firm made significant trades to stabilize the stablecoin’s $1 peg, creating a deceptive appearance of market stability. Tai Mo Shan also played a role in underwriting TerraUSD’s sister token, Luna, which the regulator claims was an unregistered security.
The SEC’s investigation found that Tai Mo Shan conducted $20 million worth of trades that masked the algorithmic stablecoin’s fragility and falsely suggested the system’s arbitrage mechanism alone maintained the peg. Jump Crypto reportedly profited over $1 billion through its collaboration with Terraform Labs, whose ecosystem collapsed in May 2022, wiping out $40 billion in investor funds.
The fallout has been widespread. Kanav Kariya, who led Jump Crypto during this period, stepped down in June 2024 amid a CFTC probe.
Bitgalactic’s Take:
The hefty fine signals growing regulatory pressure on crypto firms engaged in dubious practices. This case highlights the risks of algorithmic stablecoins and the critical role transparency plays in rebuilding trust in decentralized finance. Bitgalactic stresses the importance of robust due diligence for investors in volatile markets like crypto, where seemingly secure assets can unravel quickly.
Meanwhile, market updates:
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