Jump Trading sued for allegedly pumping and dumping tokens

Fracture Labs has filed a lawsuit against Jump Trading for dumping DIO tokens, causing the token value to drop by more than 99% and causing heavy damage to the project.

On October 15, the game development project Fracture Labs filed a lawsuit against Jump Trading for allegedly carrying out a DIO token pump and dump scheme. According to the lawsuit filed, Fracture Labs said it signed a contract with Jump Trading in 2021 to act as a market maker for the DIO token issuance on the Huobi exchange (now HTX).

Fracture Labs' lawsuit against Jump Trading

Based on the original agreement, Fracture Labs transferred 10 million DIO tokens (equivalent to $500,000 at the time) to Jump Trading for the purpose of supporting liquidity and promoting DIO token trading. In addition, Fracture Labs also sent an additional 6 million DIO tokens (worth about $300,000) directly to Huobi to provide initial liquidity for transactions.

Thanks to many shill posts from KOLs hired by Huobi and Jump, the DIO token price quickly skyrocketed to $0.98, bringing the total value of tokens held by Jump Trading to $9.8 million. However, right after the DIO token price peaked, Jump Trading suddenly dumped all of the DIO tokens they held.

This massive liquidation caused the price of DIO to plummet, to only about $0.005, down more than 99%. At this time, Jump Trading bought back 10 million DIO tokens for only $35,000 and returned these tokens to Fracture Labs, unilaterally terminating the signed market making contract.

Fracture Labs said:

"Jump Trading's DIO sell-off caused the token's value to fluctuate far beyond the limits that Jump Trading had proposed, breaking all agreements Fracture Labs had signed with HTX. The catastrophic decline in DIO's price not only damaged investors' confidence, but also put Fracture Labs in a difficult position, making it nearly impossible to raise capital and attract partners' interest."

Fracture Labs also added that it had deposited 1.5 million USDT for liquidity on Huobi as part of an agreement to ensure that Fracture Labs would not manipulate the market during the first 180 days of DIO trading.

However, after Jump Trading's sell-off and the price of DIO plummeted, Huobi refused to refund the majority of this USDT, causing further financial losses to Fracture Labs.

This is not the first time Jump Trading has been involved in token price manipulation scandals for profit. In 2023, the US Securities and Exchange Commission (SEC) investigated the role of the fund and its head, Kanav Kariya, accusing it of subsidizing LUNA-UST in the first depeg incident to gain $1.3 billion.

In addition, suspicious actions from Jump Crypto - Jump Trading's investment fund such as announcing support for 120,000 ETH for Wormhole after the $325 million hack and being involved in the collapse of FTX in 2022 have prompted the CFTC to investigate whether Jump Crypto has committed any wrongdoing in the process of investing in cryptocurrency projects.