SEC Charges Jump Crypto Subsidiary for Role in Terra’s Stablecoin Collapse

The U.S. Securities and Exchange Commission (SEC) announced that Tai Mo Shan Ltd. has agreed to pay $123 million to resolve allegations of misleading investors about the stability of terrausd, Terra’s algorithmic stablecoin.

Tai Mo Shan Settles SEC Allegations Over Terrausd for $123 Million

Tai Mo Shan, a subsidiary of Jump Crypto Holdings, was accused of engaging in deceptive practices to stabilize terrausd’s $1 peg. According to the SEC complaint, the firm purchased over $20 million worth of terrausd (UST) on days when its value dropped below $1.

These actions allegedly misled investors into believing that UST’s algorithmic mechanisms, designed to maintain the peg, were functioning independently.

The SEC further alleged that Tai Mo Shan’s trading was incentivized by Terraform Labs, which offered discounted options for its sister token, Luna. The charges also include violations of securities laws in the underwriting and sale of Luna tokens.

Tai Mo Shan reportedly acted as a statutory underwriter by acquiring Luna from Terraform Labs and reselling it as securities on U.S.-based crypto platforms between January 2021 and May 2022, according to the SEC order.

The collapse of UST in May 2022, known as a key event during the so-called “crypto winter,” triggered significant losses in the cryptocurrency market. Terraform Labs and its founder, Do Kwon, were previously found liable for fraud this year, resulting in a $4.5 billion settlement with affected investors.

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