The US regulatory body, the Commodity Futures Trading Commission (CFTC) is investigating Jump Crypto, the Chicago-based trading firm for its crypto activities. The agency is looking to scrutinize its trading and investment actions.
Jump Crypto and Massive Controversies
Over the years, Jump Crypto has gained recognition for its proficiency in algorithmic trading and has emerged as a prominent market maker and investor in the crypto sector.
Unfortunately, its alleged involvement in a string of hacks and startup failures has tarnished its reputation. This switch has caused the firm to reduce its crypto activities. Notably, a significant setback for the firm was the $325 million breach in contract with Wormhole, a Decentralized Finance (DeFi) platform that aims to connect different blockchains.
Also, after the downfall of the FTX Exchange in November 2022, it became known that Jump Crypto had incurred losses close to $300 million as a leading market issuer on the defunct trading platform.
The firm also decided not to participate in the Spot Bitcoin ETF competition despite the massive prospects of the new asset class. Jump Crypto has had to miss out on the hype with its rivals experiencing massive adoption from major investors.
The CFTC decided to launch a probe against the firm after this turbulent period.
US Watchdogs Crackdown On Crypto Exchanges
Jump Crypto got into trouble when the US Securities and Exchange Commission (SEC) sued Terraform Labs and its founder Do Kwon in February 2023 over the failed TerraUSD stablecoin.
The regulatory agency alleged that a U.S. trading firm had secretly supported Terra’s stablecoin during a near collapse in 2021. This firm, per discovery turned out to be Jump Crypto. The case ended with no charges levied against Jump Crypto while Terraform recently settled the accompanying legal tussle with a fine of $4.47 billion with the SEC.
The firm’s crypto activities fall under the jurisdiction of the CFTC and this investigation against it marks the most recent examination carried out by the agency. This follows after its crackdown on the Binance exchange, calling out oversight in the deployment of AI in DeFi, and Kucoin amongst others.
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