Jump Crypto submitted documents in the SEC vs. Terraform Labs case in confidence

CS Web Team
By CS Web Team 2 Min Read

Judge allows Jump Crypto confidential document submission in SEC's lawsuit against Terraform Labs amid allegations of market manipulation.

Federal Judge Jed Rakoff has granted a request permitting Jump Crypto to provide specific papers in a secret manner, which is a noteworthy move in the continuing legal dispute between Terraform Labs and its founder, Do Kwon. This decision relates to the litigation that the US Securities and Exchange Commission (SEC) brought against Terraform Labs during the discovery process. However, Judge Rakoff pointed out that if the court ultimately determines that any document should be made public, this confidentiality could be lifted.

The main focus of the case is Jump Crypto’s alleged $1.28 billion profit from manipulating the price of the stablecoin TerraUSD (UST). The SEC claims that in order to increase liquidity, Terraform Labs lent Jump Crypto a sizable quantity of Terra (LUNA) tokens in 2019 and 2020. According to the SEC, Jump Crypto sold LUNA on a regular basis, which caused volatility in the market. Moreover, Jump Crypto purportedly misled investors by portraying its large-scale acquisition of the stablecoin as a successful algorithmic re-pegging when TerraUSD lost its dollar peg in May 2021.

After the Terra ecosystem collapsed in 2021, a lawsuit was filed against Terra and Kwon in February 2023. The SEC charges that Kwon and Terraform Labs misled investors by, among other things, fabricating information on the usage of the Terraform blockchain by Chai, a Korean mobile payment processor. Unless both parties request summary judgments, the trial is scheduled for January 29, 2024, in Manhattan, with jury selection to take place on that date. Do Kwon is serving a jail sentence in Montenegro for document falsification in addition to the civil litigation. An extradition decision to either the US or South Korea was just made.

The court case is being widely watched by the cryptocurrency community, as it has the potential to establish important precedents regarding the regulation and legal treatment of bitcoin firms and their CEOs.

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