**Jump Trading Faces $123 Million Penalty Over Role in TerraUSD Collapse**
Jump Trading has faced significant legal and financial consequences due to its involvement in supporting the TerraUSD algorithmic stablecoin, which famously failed, wiping out over $40 billion in investor capital. On December 20, 2024, the U.S. Securities and Exchange Commission (SEC) announced that Tai Mo Shan LTD., a division of Jump Trading, agreed to pay $123 million to resolve allegations of misleading investors about the stability of TerraUSD.
This settlement also addressed claims that the company violated securities regulations by supporting token offers for Luna, the sibling cryptocurrency of TerraUSD.
**SEC Takes Action Against Jump: $123M Penalty for TerraUSD Involvement**
Jump Trading’s $1 billion windfall from supporting TerraUSD’s unstable algorithm is now costing the company $123 million in SEC fines. The collapse of TerraUSD led to the loss of $40 billion in investor assets.
Jump’s alleged role? Purchasing $20 million of UST in 2021 to manipulate… pic.twitter.com/yBN20ipisR
— Mario Nawfal’s Roundtable (@RoundtableSpace) December 21, 2024
**Jump Trading’s Covert Role in the TerraUSD Collapse**
Earlier court documents revealed that Jump Trading made an astonishing $1.28 billion by covertly backing TerraUSD in 2021, a year before the stablecoin’s catastrophic collapse. The company bought Luna tokens at heavily discounted prices through a private deal with Terraform Labs and subsequently sold them for significant profits.
This operation not only contributed to further market instability but also raised concerns about the lack of transparency in cryptocurrency transactions. The TerraUSD crisis underscored the vulnerabilities of algorithmic stablecoins and the dangers of opaque market practices. Jump Trading’s involvement in this debacle serves as a stark reminder of how unchecked behavior can exacerbate market volatility.
Although the company has not publicly admitted to any wrongdoing, the $123 million settlement suggests an acknowledgment of the issues surrounding its participation. In the aftermath, industry stakeholders have called for stricter regulations to prevent similar incidents and restore investor confidence.
Additionally, it is noteworthy that in August, CNF revealed that Jump Trading had liquidated approximately $300 million worth of Ethereum, moving significant volumes of Ethereum, USDC, and other cryptocurrencies to centralized exchanges (CEXs).