Jump Crypto’s wholly owned subsidiary, Tai Mo Shan, has reached a $123 million settlement with the US Securities and Exchange Commission (SEC) related to its role in wrongdoing. Misinformation about the stability of stablecoin TerraUSD (UST).
Jump Crypto, a subsidiary of Chicago-based proprietary trading group Jump Trading, is a core element of Terra’s ecosystem. Currently, the company is under investigation by the US Commodity Futures Trading Commission (CFTC).
Tai Mo Shan Settles with SEC Over False Claims About TerraUSD
On December 20, the SEC pointed to Tai Mo Shan’s fraudulent practices during the UST devaluation crisis. The company attempted to stabilize UST by purchasing more than $20 million of the stablecoin.
The SEC claims that this action creates a false signal to the market that Terra’s algorithmic mechanisms are effectively maintaining its value. However, this action did not prevent widespread disruption and significant investor losses caused by the devaluation event.
Furthermore, the SEC charged Tai Mo Shan with acting as a statutory guarantor for the Terra Luna Token. The agency confirmed that the company managed these assets as securities through unregistered transactions. Their strategy includes planning to distribute these Tokens on US-based exchanges from January 2021 to May 2022.
SEC Chairman Gary Gensler emphasized the larger impact of the incident, speak clearly:
“[Tác động của UST bị mất giá] reverberated throughout the cryptocurrency market, ultimately wiping out the savings of countless investors. Whatever the label, cryptocurrency market participants should comply with securities laws where applicable and should not mislead the public. Otherwise, investors will suffer losses.”
Tai Mo Shan will pay $73,452,756 in disgorgement, $12,916,153 in pretrial interest and a $36,726,378 civil penalty as part of the settlement. The company neither admitted nor denied the SEC’s findings but agreed to a cease and desist order to prevent future violations of registration and fraud regulations.
The deal comes shortly after Terraform and founder Do Kwon were found responsible for fraud and the offering of unregistered securities. They agreed to pay a significant $4.5 billion to compensate affected investors.
In January 2024, Terraform Labs declared bankruptcy. The company subsequently transferred control of the Terra blockchain to the community and discontinued many of its products and services.