Jump Trading subsidiary settles with SEC for £123 million over UST incident misleading investors

Jump Trading encryptioncoin department's Tai Mo Shan Ltd. has agreed to pay $123 million to settle allegations by the US regulatory agency SEC that it misled investors about the stability of TerraUSD algorithmic Stable Coin.

Attempting to stabilize UST coin price, misleading investors

The U.S. Securities and Exchange Commission (SEC) stated in a statement last Friday that Tai Mo Shan Ltd. misled investors about the stability of the so-called "algorithmic Stable Coin" Terra USD (UST) issued by Terraform Labs PTE Ltd. (Terraform), and further accused Tai Mo Shan of acting as an unregistered dealer in the issuance and sale of securities involving certain issuances and sales of LUNA (an encryption asset issued by Terraform).

Terraform and its founder Do Kwon were found liable for fraud and unregistered securities issuance by a federal district court in April 2024, and agreed to pay $4.5 billion to affected investors. The SEC found that when UST depreciated from $1 in May 2021, Tai Mo Shan and Terraform entered into an agreement to incentivize Tai Mo Shan to purchase UST in exchange for Terraform's existing option to purchase LUNA. On that day and in the following days, Tai Mo Shan attempted to restore UST to its peg of $1, including purchasing over $20 million worth of UST. Given Terraform's previous statement that its algorithmic mechanism would maintain UST's peg to $1, Tai Mo Shan traded UST in a negligent manner, deceiving the market into believing Terraform's algorithmic mechanism, when in fact Tai Mo Shan was buying a large amount of UST under the incentive of Terraform, thereby stabilizing the situation to some extent.

The SEC also found that from at least January 2021 to May 2022, Tai Mo Shan served as a statutory underwriter of LUNA, acquiring certain LUNA coin assets from Terraform for the purpose of offering and reselling LUNA in the form of securities on a U.S. encryption asset trading platform shortly after acquiring LUNA from Terraform.

Settled with SEC for $123 million

SEC Chairman Gary Gensler said:

This case reminds us that in the encryption coin market, we have seen investors suffer significant losses due to fraud. Participants in the encryption coin market should comply with applicable securities laws and not deceive the public. Otherwise, investors will be harmed.

As part of the settlement agreement, Tai Mo Shan has agreed to pay approximately $123 million, including $73,452,756 in illegal proceeds, $12,916,153 in pre-judgment interest, and $36,726,378 in civil penalties.

This article Jump Trading subsidiary misled investors in UST incident and settled with SEC for 123 million RMB first appeared on Chain News ABMedia.