Benzinga - The U.S. Securities and Exchange Commission's (SEC) legal documents have substantiated that Jump Trading, a crypto trading entity, played a pivotal role in rescuing the struggling algorithmic stablecoin TerraUSD (CRYPTO: USTC), spearheaded by Do Kwon, a year prior to its eventual downfall.
Jump Trading, based in Chicago, bolstered the price of the algorithmic stablecoin back to the $1 mark by procuring over 62 million tokens, after the stablecoin had deviated from its peg in May 2021, the court records disclosed. Subsequently, Kwon, who serves as Terra's CEO and is a co-founder of Terraform Labs, hailed the resurgence as evidence of the self-correcting capabilities of the stablecoin algorithm and its capacity to uphold a dollar peg through an intricate interplay with its counterpart cryptocurrency Luna, facilitated by code, according to a Fortune report.
The SEC had previously disclosed in its lawsuit against Terraform Labs and Kwon that an unidentified trading partner had substantially benefited from salvaging the Terra stablecoin from near collapse.
A cash infusion worth millions of dollars was received by Terra a year before it imploded due to a digital currency bank run on its algorithmic stablecoin.
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In return, Terraform Labs, the entity behind the Terra stablecoin, consented to allow Jump Trading to purchase Luna tokens at prices of 30, 40 and 50 cents over a span of three years.
This deal reportedly earned Jump $1.28 billion, as per an SEC complaint that accused Kwon and Terraform Labs of committing securities fraud and selling unregistered securities.
No allegations of misconduct have been made against Jump Trading.
Recently, a class-action lawsuit was launched against Jump Trading and the president of Jump Crypto, Kanav Kariya, by an investor due to the company's profits made from supporting Terra.
The latest court documents from the SEC include a contract dating back to November 2019, which details a three-year loan agreement between Terraform Labs and Jump subsidiary Tai Mo Shan Limited for 30 million Luna tokens with a 2% annualized interest, also payable in Luna tokens.
Currently, Kwon is on bail in Montenegro, facing charges related to the alleged use of a falsified Costa Rican passport.
Both the U.S. and South Korea are working to extradite him.
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