In a recent development, an American court has granted permission to Jump Crypto, identified as a “third party” in the ongoing Securities and Exchange Commission (SEC) case against Terraform Labs, to submit certain information confidentially. This ruling comes as part of the SEC’s lawsuit against Terraform Labs and its founder, Do Kwon, accusing them of offering and selling unregistered securities and engaging in fraudulent activities.
The SEC’s allegations against Terraform Labs and Do Kwon are serious, claiming that they raised billions of dollars through the sale of unregistered securities and orchestrated fraud. In addition, the SEC pointed out that TerraUSD (UST), the associated stablecoin, suffered a significant loss in value in May 2022, plummeting to just $0.04. The stablecoin is now known as USTC.
Jump Crypto, although not a defendant in the case against Terraform Labs, is believed by the SEC to have played a crucial role in the collapse of the UST stablecoin. The SEC’s allegations state that when UST deviated from its dollar parity in May 2021, Terraform Labs orchestrated a scheme involving Jump Crypto purchasing a considerable amount of the faltering stablecoin to artificially boost its price. The SEC further claimed that the second depeg in May 2022 did not offer any recovery opportunity due to the absence of options similar to the Jump Crypto deal.
The recent court order clarified that Jump Crypto had the right to submit certain information confidentially to the court. However, the court also retained the discretion to publicize these filings in the future if deemed necessary. In such an event, Jump Crypto’s legal team will be notified, allowing them to raise any objections they may have.
Terraform Labs, in their defense, denied the SEC’s allegations and refuted the claim that Jump Crypto’s trading activities were responsible for UST’s recovery in 2021. They assert that the available data would support their argument against the SEC’s claims.
As the SEC case against Terraform Labs and Do Kwon progresses, Jump Crypto’s involvement and its potential role in the collapse of the UST stablecoin will undoubtedly be subject to further scrutiny. The court’s ruling allowing Jump Crypto to submit evidence confidentially adds an interesting dimension to the proceedings. While Terraform Labs continues to defend itself against the allegations, the outcome of the case will have significant implications for the cryptocurrency industry and may shape future regulations and actions taken by regulatory bodies.
Leave a Reply