Market maker Jump Trading earned over $1.2 billion in a secret deal with Terraform Labs by saving the failed algorithmic stablecoin terraUSD (UST) before it eventually crashed, The Wall Street Journal has learned, citing new court filings between the US Securities and Exchange Commission (SEC) and Terra's Do Kwon.
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According to the report, the Chicago-based market maker bought over 60 million UST to bring the stablecoin's price back to $1 in 2021 shortly after it de-pegged.
Although it was Jump Trading who saved UST, Do Kwon never publicly admitted that, claiming the stablecoin managed to recover its price thanks to its self-healing algorithms.
In February 2023, the SEC filed a civil fraud lawsuit against Do Kwon, saying he orchestrated a "multi-billion dollar crypto asset securities fraud" involving an algorithmic stablecoin and other crypto asset securities. The watchdog also alleges that Terraform and Kwon offered and sold investors other means to invest in their crypto empire, including the crypto asset security tokens.
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