PANews reported on October 17 that according to Bloomberg, video game developer FractureLabs filed a lawsuit against Jump Trading, accusing one of the largest market makers in the cryptocurrency industry of "fraud and deception" by manipulating the price of tokens used in an online game.
According to the lawsuit, FractureLabs planned to raise funds through an initial offering of DIO tokens through the Huobi (now rebranded HTX) exchange in 2021. It hired Jump to act as a market maker for DIO, a token used in its online game (Decimated) and also traded on the cryptocurrency market. As part of the agreement, it loaned 10 million tokens to a subsidiary of Jump, while sending another 6 million DIO tokens to Huobi to be sold in the offering. Huobi (now HTX) invited online influencers to promote the DIO token, causing its price to surge to a high of $0.98, meaning that the tokens borrowed by Jump were worth $9.8 million at the time. As the sale of DIO tokens caused its price to fall to about 0.5 cents, Jump then systematically liquidated its holdings of DIO tokens, generating millions of dollars in revenue for itself. Jump then repurchased the heavily discounted tokens, which were then worth about $53,000, and returned them to FractureLabs, and then canceled its agreement to act as a market maker for the tokens. The lawsuit alleges that “Jump concealed its true intention to exploit DIO’s initial offering to ‘pump and dump’ the token alongside HTX.” Jump also told FractureLabs that it would keep the price of DIO within certain parameters required by Huobi (now HTX) in its exchange listing agreement, but Jump’s sale of DIO caused the token price to fall outside of those parameters, so Huobi (now HTX) refused to return most of the $1.5 million deposit of Tether USDT stablecoins that FractureLabs paid under the agreement, the lawsuit alleges.
A Jump spokesperson said in a statement: "These allegations are factually flawed and completely without merit. Jump intends to vigorously defend itself." HTX is not named as a defendant in the case, and when asked for comment, the exchange said: "HTX is committed to full compliance with all applicable laws and regulations. Because this matter is currently under litigation and HTX is not named as a defendant, we are unable to comment further at this time."