Jump Trading’s Tai Mo Shan Ltd. will pay $123 million to settle allegations it misled investors by stabilising TerraUSD during its collapse, the Securities and Exchange Commission said Friday.
The firm, tied to Jump’s crypto unit, made significant purchases to prop up the failed stablecoin’s $1 peg, deceiving the market.
The SEC accused Tai Mo Shan of negligence, citing its $20 million in trades that created a false impression of TerraUSD’s stability.
The regulator also highlighted its role in underwriting Luna, TerraUSD’s sister token, which it alleges was offered as an unregistered security.
“Tai Mo Shan should have known its trading misled the investing public to believe Terraform’s arbitrage mechanism alone stabilised the price,” the SEC wrote in its cease-and-desist order.
The settlement stems from Jump Crypto’s involvement in Terraform Labs’ operations, where the firm allegedly profited by over $1 billion.
Terraform’s collapse in May 2022 erased $40 billion in investor assets and was one of the crypto industry’s most infamous disasters.
Jump Crypto played a large role in Terraform Labs’ ecosystem, with Tai Mo Shan’s trades propping up TerraUSD at a critical moment of market stress.
These actions, the SEC claims, gave investors a false sense of security about the algorithmic stablecoin’s viability.
The allegations also extend to Luna, which the regulator considers a security and whose offerings Tai Mo Shan helped underwrite.
Kanav Kariya, who led Jump Crypto during its involvement in Terraform Labs, stepped down in June 2024 amid a CFTC probe.
Crypto market movers
Bitcoin is up 0.1% over the past 24 hours to $101,740.
Ethereum is down 2% to $3,840.
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Kyle Baird is DL News’ Weekend Editor. Got a tip? Email at kbaird@dlnews.com.
