Jump Trading Lawsuit Sparks Allegations of Token Price Manipulation

Key Points:

• FractureLabs accused Jump of fraud and price manipulation during the 2021 initial offering of its DIO token, which is used in the Decimated game.
• In the Jump Trading lawsuit, FractureLabs claimed the market maker inflated DIO’s price and sold off tokens for profit.

According to Bloomberg, FractureLabs, a video-game developer, filed a complaint against Jump Trading, one of the major cryptocurrency industry market makers, accusing the company of fraud and price manipulation related to the DIO token in use for its online game, Decimated.

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Lawsuit Jump Trading Claims The Company Engaged in Pump-and-Dump Scheme

Jump Trading lawsuit against the market maker includes price manipulation of a token following its 2021 initial offering on HTX.

The complaint said that the defendant, Fracture Labs, hired the services of Jump to control the market for its DIO token following its fundraising. Under the agreement, the game developer advanced Jump’s subsidiary 10 million DIO tokens and subsequently transferred a further 6 million tokens to HTX, which sold them. Following an online promotional campaign by purported “influencers,” the token price jumped to $0.98, putting the value of Jump’s hoard of the DIO token at $9.8 million.

The Jump Trading lawsuit also claims that after the company sold its DIO, the token crashed down to a low of less than half a cent. Jump then bought the token at the low price and returned the tokens to FractureLabs, drawing out of its agreement to be market maker of the token. On its part, FractureLabs accuses Jump of a “pump and dump” scheme, alleging the firm intentionally manipulated the token’s value to profit.

HTX Withholds $1.5 Million Amid Dispute Over Token Price Collapse

The Jump Trading lawsuit alleges that the company made misrepresentations about its intentions because it had initially agreed to keep the token’s price within a range set by HTX. In response to the token price crash, HTX is said to have withheld most of a $1.5 million Tether deposit made by FractureLabs.

FractureLabs is now seeking arbitration to recover these funds. Jump has denied the allegations, stating that they were “factually flawed” and promising to fight back.

The Jump Trading lawsuit just adds to a set of controversies surrounding the market maker. In a 2023 lawsuit filed by the U.S. Securities and Exchange Commission against Terraform Labs, the SEC alleged that Jump was instrumental in the downfall of the UST stablecoin, also known as USTC. While Jump was not a defendant in the case, according to the regulator, Jump helped Terraform Labs re-peg UST with the U.S. dollar after an initial de-pegging in May 2021.