- Recent reports have identified Jump Trading as the unnamed firm that made $1.28 billion from Terra.
- The SEC’s complaint against Do Kown and Terraform Labs revealed that a third party helped restore UST’s peg.
- Jump Trading’s deal with Terra allowed the company to buy Luna at a heavily discounted price.
- The firm had close ties to the Terra ecosystem.
When the Securities and Exchange Commission (SEC) sued Do Kwon and Terraform Labs, it mentioned a mysterious third party in its complaint which played a huge role in the tokens associated with the Terra ecosystem. The crypto community scrambled to identify this unnamed firm, which made a whopping $1.28 billion before the collapse of Do Kwon’s crypto empire. Reports have now emerged identifying Chicago-based Jump Trading as the mysterious firm.
The SEC’s court filing mentioned a third party that helped Terraform Labs restore TerraUSD’s (UST) dollar peg when it dropped below $1 in May 2021. As per the complaint, Do Kwon and his firm secretly negotiated a deal with a third party under which the latter would purchase massive amounts of UST to restore its peg. However, the quid pro quo allowed this third party to make exponential returns on its investment.
Jump Trading bought Luna at heavily discounted prices
A recent report by The Block identified Jump Trading as the third party that was involved with the Terra ecosystem before its downfall. Sources with knowledge of the trades that restored UST’s peg confirmed that Jump Trading had helped Do Kwon, in exchange for a massive discount on Luna purchases. While Luna was trading at $90 in the secondary market, the Chicago-based crypto giant was able to buy Luna for as little as 40 cents. Jump Trading was reportedly enjoying discounts on Luna purchases since as early as November 2019. As per the SEC’s accusations, the trading firm provided market-making for Luna in exchange for discounts.
The securities regulator has neither filed any charges against Jump Trading nor accused them of any wrongdoing. The firm reportedly declined to comment on the recent developments. A Terra researcher who goes by FatManTerra on Twitter was the first one to identify the nexus between Jump Trading, Terraform Labs, and FTX. In May 2022, the researcher claimed that several whistleblowers had informed him about the UST bailout in May 2021 and the discounted Luna deal. He identified the trading firm, as well as its President Kanav Kariya, for their role in Terra’s collapse.