Jump Crypto Is Unnamed Firm That Made $1.28B From Do Kwon’s Doomed Terra Ecosystem: Sources

A complaint by the SEC against Do Kwon and Terraform Labs revealed an unnamed trading firm helped Kwon restore UST’s $1 peg in 2021 in exchange for discounted LUNA tokens. The unnamed trading firm is said to have made a fortune by shorting UST in the months leading up to the restoration of the peg.
Jump Crypto Is Unnamed Firm That Made $1.28B From Do Kwon’s Doomed Terra Ecosystem Sources

When U.S. regulators sued Do Kwon and Terraform Labs this week for the spectacular implosion of the terraUSD (UST) stablecoin and related LUNA token, a huge question was left unanswered: Who was the trading partner that booked $1.28 billion in profits before Terra’s $40 billion ecosystem crumbled?

The mystery trading partner that profited off of Terraform Labs’ $40 billion ecosystem before it crumbled is still unknown, leaving many questions unanswered. U.S. regulators sued Do Kwon and Terraform Labs this week, but the biggest question on everyone’s mind is who was the lucky trader that booked $1.28 billion in profits?

According to people familiar with the matter, Jump Crypto, a Chicago-based company whose parent has deep roots in conventional finance, has become a giant in digital assets.

The U.S. Securities and Exchange Commission (SEC) this week filed a complaint accusing Kwon and Terraform of securities fraud and selling unregistered securities. The complaint references an unnamed U.S. trading firm that had an exclusive market-making arrangement with Terraform Labs, the developer of the UST stablecoin. That anonymous firm was not accused of any wrongdoing.

Jump Crypto was able to buy heavily discounted luna tokens, the assets that supported UST. The firm deployed only $62 million to help keep UST’s price near $1 in May 2021, according to the SEC complaint, but earned $1.28 billion by selling off discounted tokens that it had purchased according to the terms of its agreement with Terraform Labs.

Jump Crypto was one of the most active and engaged members of the Terra ecosystem, frequently posting governance proposals and heavily investing in the project. In addition to building a Terra cross-chain bridge, they also co-led a $1 billion capital raise to seed the Luna Foundation Guard. Jump Crypto President Kanav Kariya also served on the board of the Luna Foundation Guard, which stewarded Terra’s multi-billion-dollar bitcoin reserve treasury.

In May 2022, the reserves were depleted in a failed attempt to restore UST’s dollar peg, and also siphoned to a Swiss bank account controlled by Kwon, according to the SEC complaint.

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