Jump Trading Reaches Agreement with SEC to Pay $123 Million Fine

Algorithmic stablecoin TerraUSD suddenly depegged from its $1 value in May 2021, causing concern among investors.

However, it quickly returned to its peg, seemingly without intervention. Unknown to investors, Tai Mo Shan, a subsidiary of Jump Trading’s crypto unit, had stepped in with $20 million in purchases to help stabilize the token.

The SEC has accused Tai Mo Shan of misleading investors in the token and its counterpart luna. As part of a settlement, Tai Mo Shan has agreed to pay a fine of $123 million, which includes disgorgement of over $86 million in profits and a civil penalty of approximately $36 million.

The SEC claims that Tai Mo Shan’s actions caused investors to believe that the token’s stabilization mechanism was functioning properly, when in fact it had been artificially propped up.

The SEC had previously accused Tai Mo Shan of profiting $1.28 billion from this deceptive behavior. Terraform Labs founder Do Kwon had previously praised the token’s resilience, but failed to mention Tai Mo Shan’s involvement in stabilizing the token.