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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