Following the legal action taken by US-based regulators against Do Kwon and Terraform Labs for the collapse of the terraUSD (UST) stablecoin and LUNA token, a significant ambiguity remains unanswered: the identity of the trading partner who realized a profit of USD 1.28 billion prior to Terra’s USD 40 billion ecosystem’s downfall.
Sources familiar with the situation have disclosed that Jump Crypto, a Chicago-based firm with a parent company heavily involved in traditional finance and a major player in the digital assets space, was the party in question. However, when asked to comment on the matter, a spokesperson for Jump Crypto declined to do so. The initial report was published by The Block.
In a recent complaint filed by the U.S. Securities and Exchange Commission (SEC), Do Kwon and Terraform were charged with securities fraud and the sale of unregistered securities which caused harm to both U.S. retail and institutional investors. The complaint contains a mention of an unidentified U.S. trading firm that held an exclusive market-making arrangement with Terraform Labs, the company behind the UST stablecoin. However, the unnamed firm was not implicated in any wrongdoing.
Sources from CoinDesk have identified Jump Crypto as the aforementioned firm, which had the capability to purchase luna tokens at significant discounts. These tokens were the underlying assets supporting UST. The SEC complaint indicates that the firm only invested USD 62 million to maintain the price of UST around USD 1 in May 2021, but ultimately made USD 1.28 billion by selling the discounted tokens that were procured in accordance with its agreement with Terraform Labs.