Jump Trading Accused Of Crypto Price Manipulation In Lawsuit By FractureLabs
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On Wednesday, video game developer FractureLabs filed a lawsuit against crypto market maker Jump Trading. The lawsuit, reported by Bloomberg, accuses Jump of “fraud and deceit” in connection with the manipulation of the price of the DIO token, which is an integral part of FractureLabs’ online game Decimated. DIO Token Surge And Collapse The complaint details that in 2021, FractureLabs intended to raise funds through an initial offering of the DIO token on the Huobi exchange, which has since been renamed HTX. As part of this project, FractureLabs engaged Jump Trading as a market maker for the DIO token. The arrangement involved the loan of 10 million DIO tokens to a subsidiary of Jump, alongside a separate transaction where FractureLabs sent 6 million DIO tokens to Huobi for sale during the offering. As the initial offering unfolded, Huobi reportedly enlisted online influencers to promote the DIO token, causing its price to surge to a peak of $0.98 at the time. This spike significantly increased the value of the tokens borrowed by Jump, bringing their worth to $9.8 million. However, the situation took a sharp turn when, according to the lawsuit, Jump began to “systematically” liquidate its holdings of the DIO token. This selling pressure led to a drastic decline in the token’s price, which plummeted to around $0.005, allowing Jump to repurchase the tokens at a fraction of their earlier value—approximately $53,000—before returning them to FractureLabs and terminating its market-making agreement. Jump Trading Accused Of ‘Pump And Dump’ Scheme FractureLabs’ lawsuit also alleges that Jump Trading concealed its intentions to use the initial public offering of DIO as an opportunity for a “pump and dump” scheme, in alleged collusion with the HTX exchange. Jump had allegedly assured FractureLabs that it would maintain the price of the DIO token within certain…
Filed under: News - @ October 16, 2024 9:17 pm