SEC fines Jump Trading subsidiary $123 million for propping up TerraUSD stablecoin during depeg
Quick Take The SEC and Tai Mo Shan, a subsidiary of Jump Trading’s crypto unit, have reached an agreement for the latter to pay about $123 million in fines after it spent $20 million to help prop up the TerraUSD stablecoin in May 2021. Tai Mo Shan will pay the penalty without admitting to or denying the SEC’s findings, pursuant to the agreement.
In May 2021, following a "depeg" of the algorithmic TerraUSD stablecoin, the token was able to stabilize back at its $1 peg, seemingly automatically. Behind the scenes, however, a subsidiary of Jump Trading's crypto unit, Tai Mo Shan, stepped in with $20 million worth of purchases to help stabilize the token, allegedly misleading investors in the token and its counterpart luna, according to an SEC complaint.
The SEC and Tai Mo Shan, presumably named after Hong Kong's highest peak, agreed that the latter should pay about $123 million in fines — over $86 million in disgorgement and about $36 million in a civil penalty — for its actions, which the regulatory agency alleges "caused investors to be deceived about the efficacy of Terraform’s arbitrage mechanism."
The $86 million figure was determined based on the amount of money, plus interest, the SEC says Tai Mo Shan profited after it stepped in with $20 million worth of buys of Terraform Labs' TerraUSD stablecoin (UST) in May 2021, after UST briefly depegged before seemingly automatically stabilizing. In exchange, Tai Mo Shan received unlocked luna tokens early, which it was able to sell into the market. The SEC had previously accused Tai Mo Shan of profiting $1.28 billion from the deal in an earlier complaint .
Though Terraform Labs founder Do Kwon touted how TerraUSD had survived a "black swan event" in "as intense of a stress test in live conditions as can ever be expected," failing to mention Tai Mo Shan's actions to prop up the coin had the effect of deceiving investors into believing the algorithmic stabilization mechanism functioned as expected, the SEC alleges.
Jump Crypto's president, Kanav Kariya, had pleaded the fifth when asked about the deal in a prior deposition. As part of the settlement, Tai Mo Shan will pay the penalty without admitting or denying the findings in the SEC's order.
"Tai Mo Shan should have known that purchasing UST and supporting its price in this manner misled the market about the stability of UST’s peg and the effectiveness of Terraform’s algorithm meant to maintain that stability," the SEC wrote in its order .
Terraform Labs, for its part, agreed to pay over $4 billion in fines in a settlement with the SEC following its ecosystem's collapse. The firm got permission from a U.S. bankruptcy judge to begin winding down in September of this year.
Disclaimer: The content of this article solely reflects the author's opinion and does not represent the platform in any capacity. This article is not intended to serve as a reference for making investment decisions.
You may also like
This Week's Preview: Macro "Flood Release" Week—Delayed CPI and the Bank of Japan's "Rate Hike Pursuit"
Key global market data will be released this week, including the U.S. non-farm payroll report, CPI inflation data, and the Bank of Japan's interest rate decision, all of which will significantly impact market liquidity. Bitcoin prices are fluctuating due to macroeconomic factors, while institutions such as Coinbase and HashKey are striving to break through via innovation and public listings. Summary generated by Mars AI This summary was generated by the Mars AI model. Its accuracy and completeness are still being iteratively improved.

Weekly Hot Picks: The Fed Cuts Rates and Indirectly "Injects Liquidity"! Silver Replaces Gold as the New Favorite?
The Federal Reserve is cutting interest rates and starting bond purchases, while Japan and other regions may turn to rate hikes. Silver repeatedly hits record highs, SpaceX is set for a 1.5 trillion IPO, and Oracle becomes the litmus test for the AI bubble. The Russia-Ukraine peace process is stuck on territorial issues, the US seizes a Venezuelan oil tanker... What exciting market events did you miss this week?

Key Highlights to Watch at Solana Breakpoint 2025
How does Solana seize market share in an increasingly competitive landscape?

Crucial Alert: ZRO Leads This Week’s $100M+ Token Unlocks – What Investors Must Know
