FractureLabs,thedeveloperoftheonlinegame“Decimated,”hasfiledalawsuitagainstJumpTrading.accusingthefirmofmarketmanipulation,BloombergNewsreportedonOct.16.

ThecomplaintallegesthatJumpengagedina“pumpanddump”schemewiththegame’snativetoken,DIO,whichistradedoncryptomarkets.

Allegations

Accordingtothefiling,FractureLabsplannedtoraisefundsthroughaninitialofferingofDIOonHTX—formerlyHuobi—andhiredJumpasamarketmakerin2021.

Aspartoftheiragreement,FractureLabsloaned10millionDIOtokenstoJump’ssubsidiaryandsent6milliontokenstoHTXforthesale.

Afterthetoken’spriceclimbedto$0.98,Jumpallegedlyliquidateditsholdings,causingDIOtocrashtolessthanhalfacent.Thefirmthenrepurchasedthetokensatafractionoftheprice,returnedthemtoFractureLabs,andcanceleditsmarket-makingcontract.

FractureLabsassertsthatJumpmisrepresenteditsintentionsandviolatedanagreementtomaintainthetoken’spricewithinaspecifiedrangeunderHuobi’slistingconditions.Asaresult,HTXwithheldmostofa$1.5millionTether(USDT)depositmadebyFractureLabs,whichthecompanyisnowseekingthrougharbitration.

WhileHTXhasdeclinedtocommentduetoongoinglitigation,itemphasizeditscommitmenttooperatingwithinlegalframeworks.

Pastcontroversies

ThisisthelatestcontroversyinvolvingJumpCrypto.InthelawsuitmovedbytheUSSecuritiesandExchangeCommission(SEC)againstTerraformLabsinFebruary2023,theregulatorstateditsbeliefthatJumpwas“instrumental”inthedownfalloftheUSTstablecoin,USTC.

AlthoughJumpisnotadefendantintheTerraformLabscase,theregulatorstatedthatwhenUSTlostparitywiththeUSdollarforthefirsttimeinMay2021,JumpallegedlyhelpedTerraformLabsreestablishthepeg.

InJune,theUSCommodityFuturesTradingCommission(CFTC)reportedlystartedinvestigatingJump’sactivitiesinthecryptomarket.However,theregulator’sprobedoesnotimplyanymisconductbythemarketmaker.

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