Did Jump Crypto Play a Role in Terra’s Collapse? SEC Probe Continues

In the ongoing legal showdown between the U.S. Securities and Exchange Commission (SEC) and Terraform Labs, a major twist has unfolded. Federal Judge Jed Rakoff has officially confirmed the delivery of groundbreaking discovery documents from Jump Crypto Holdings LLC on November 27.

These documents hold the promise of unraveling the complexities of Terraform Labs’ operations and the subsequent collapse.

Judge Rakoff’s Nod

Judge Rakoff, presiding over the case in the U.S. District Court for the Southern District of New York, confirmed the submission in a recent filing. The court has also agreed to maintain the confidentiality of particular materials as requested in the letter from Jump Crypto Holdings’ legal representative. However, should the court consider disclosing any of these materials, it will first notify Jump’s attorney, allowing them to raise any objections.

Jump Crypto under the Spotlight

Once a key player in Terraform Labs’ thriving world, Jump Crypto Holdings LLC is now under the legal microscope. The company was a major player in investment rounds, particularly in setting up a UST reserve, a critical element in Terra’s stability mechanism. But with the crash of TerraUSD (UST) and the subsequent chaos, questions loom over Jump Crypto’s role, raising suspicions of possible misconduct.

In May, investors filed a lawsuit against Jump Trading and its CEO, Kanav Kariya, accusing them of manipulating UST’s price for an alleged profit of around $1.3 billion. These allegations have drawn the attention of the SEC, which is investigating Jump Crypto Holdings for its possible role in the events leading to Terra’s downfall.

Read More: Terraform Labs Pumps $15 Million to Revive the Terra (LUNA) Ecosystem

SEC’s Tactics and Moves

The SEC’s lawsuit against Terraform Labs and its co-founder Do Kwon, filed in February, accuses them of conducting a multi-billion dollar crypto asset securities fraud. The legal battle intensified in October when Kwon, Terraform Labs, and the SEC filed petitions for summary judgment.

Kwon’s legal troubles escalated when he was arrested in June by Montenegrin authorities for using forged travel documents. He was subsequently sentenced to four months in prison. On November 24, a Montenegrin court approved Kwon’s extradition to either the United States or South Korea to face charges, pending approval from the minister of justice.

Also Read: “Expect a Big Win for the SEC”: Expert Provides Grim Prediction for Terra vs SEC

This latest development with Jump Crypto Holdings’ documents could provide pivotal information for the SEC’s case, potentially influencing the outcome of one of the most high-profile legal battles in the cryptocurrency world.