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FractureLabs, a video-game developer, has taken legal action against Jump Trading, one of the leading market makers in the cryptocurrency space. The lawsuit, filed in a U.S. federal court in Chicago, accuses Jump of manipulating the price of DIO tokens, the native cryptocurrency of FractureLabs’ online game “Decimated.”
According to the complaint, Jump was retained by FractureLabs as a market maker for the DIO token during its initial coin offering (ICO) on the Huobi exchange, now known as HTX, in 2021.
The lawsuit alleges that Jump Trading systematically sold off its DIO holdings during the ICO after influencers had driven the token’s price up to a peak of $0.98, making a significant profit in the process. The resulting sell-off caused the price to plummet to nearly half a cent, allowing Jump to repurchase the tokens at a steep discount before returning them to FractureLabs and ending its market-making agreement.
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Allegations of Price Manipulation
The suit claims that FractureLabs loaned Jump Trading 10 million DIO tokens, while also sending 6 million tokens to HTX for sale during the token offering. Following the price surge to $0.98, Jump allegedly liquidated its position, pocketing millions in revenue while causing the token’s value to collapse. As a result, the token’s worth plummeted to approximately $53,000, and Jump returned the tokens to FractureLabs before abruptly canceling its agreement.
Furthermore, Jump Trading also faces accusations of breaching its commitment to maintain the token’s price within certain parameters agreed upon with HTX. This violation led HTX to withhold a significant portion of FractureLabs’ $1.5 million Tether (USDT) deposit. FractureLabs is also pursuing separate arbitration claims against HTX in Singapore for their role in the incident, although HTX is not listed as a defendant in the current U.S. case.
Jump Trading Respond to Allegations
The market maker, in response to the lawsuit, denied any wrongdoing, stating, “These allegations are factually flawed and completely baseless. Jump intends to vigorously defend itself.” HTX, though not directly involved in the lawsuit, emphasized its commitment to regulatory compliance, declining to comment further due to ongoing litigation.
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This lawsuit adds to Jump Trading’s already complex history in the cryptocurrency industry, particularly after its involvement in the collapsed TerraUSD stablecoin project.
