- ChainLinkGod said Jump Trading played a significant role in the UST collapse debacle.
- The crypto investigator said a secret deal was made with Jump Trading to keep the UST price up.
- ChainLinkGod said Jump Trading raked in $1.28 billion extracted from retail investors’ value.
In a recent tweet, pseudonymous crypto investigator ChainLinkGod discounted troubled crypto founder Do Kwon’s argument that the UST depeg from the U.S. dollar was caused by natural market forces.
ChainLinkGod alleged that Jump Trading, a U.S. market maker, played a significant role in the UST collapse. He continued that while Do Kwon reassuringly told the public that UST was pegged to the dollar, his company, Terraform Labs, had secretly made an undisclosed deal with Jump Trading to keep the stablecoin’s value up.
As a result, Jump Trading allegedly made “$1.28B of value extracted from retail UST investors.” While raising the long calls for transparency, the crypto investigator said the “crypto space is filled with wolves in sheep’s clothing.”
His statements highlight growing developments in regulatory actions against Do Kwon. An October 18 filing in a New York Court raised the argument that Jump Trading made substantial gains while helping to prop up the price of UST before its eventual collapse.
In particular, the new filing seeks to prove that the algorithmic stablecoin was not fully pegged as claimed by Do Kwon. The SEC contends that as UST struggled to maintain its peg, Jump Trading came into the picture at Terraform Labs’ request.
The UST collapse of May 2021 was a significant turn for the crypto ecosystem. The collapse wiped off over $17 billion and pulled the crypto market into a crypto winter from which it is yet to recover.
In addition, the UST wipe-out and subsequent FTX collapse brought more scrutiny against crypto entities. Regulators allege a web of illegal trading activities spread across multiple companies within these crypto firms. Since then, regulators have upped their regulatory checks against founders and their crypto companies.
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