During the ongoing hearings in the Terra-SEC case, a witness shed light on events leading up to the collapse of LUNA.
Today, in the Terraform Labs case, James Hunsaker, a former employee of Jump Trading, made a startling revelation. Hunsaker disclosed that he had lodged a complaint with the SEC against Jump Trading, alleging Do Kwon’s involvement in supporting the UST algorithmic stablecoin prior to its collapse, which amounted to $40 billion in 2022.
Allegations Against Jump Trading in Terraform Labs Case
According to recent statements, Jump Trading, a secretive trading firm with cryptocurrency holdings, reportedly engaged in a “significant agreement” with Terraform Labs (TFL) aimed at boosting the adoption of UST, an algorithmic stablecoin.
James Hunsaker, a former employee of Jump Crypto who later founded the blockchain startup Monad Labs, revealed that when UST deviated from its $1 peg in May 2021, Jump Crypto president Kanav Kariya assured, “I talked to Do, he will give us tokens to be unlocked later.”
Subsequently, Jump Trading co-founder Bill DiSomma allegedly instructed investors to execute “aggressive trades” and accumulate UST. Hunsaker depicted DiSomma as the primary decision-maker at Jump Crypto, emphasizing his willingness to risk hundreds of millions of dollars due to Terra’s significance as a project for Jump.
Both Kariya and DiSomma opted not to respond to the allegations in their statements to the SEC regarding the Terraform Labs case. The SEC asserted that Jump Trading garnered profits of approximately $1 billion through its dealings with Terraform Labs.
SEC Allegations and James Hunsaker’s Testimony
A crucial aspect of the SEC’s fraud case against Terraform Labs (TFL) and Do Kwon centered on their alleged concealment of Jump’s involvement in rescuing UST during the May 2021 depeg, preceding the eventual collapse in 2022. Kwon purported that UST was “automatically self-healing,” a notion investors trusted.
James Hunsaker departed from Jump in February 2022. Following the May debacle, she attempted to anonymously share her insights on Reddit. By August 2022, Hunsaker had filed a whistleblower complaint with the SEC. “Witnessing the impact of May 2022 on all affected parties, I felt compelled to seek justice and compensation,” Hunsaker stated in court.
Notably, Hunsaker had invested $200,000 of personal funds into UST to obtain approximately a 20% return on Anchor Protocol. Despite harboring doubts regarding UST’s stability, he believed he could swiftly exit if necessary. Hunsaker sold his UST holdings on May 7 or 8, 2022, coinciding with the onset of the depeg.
Important: Please note that this article is only meant to provide information and should not be taken as legal, tax, investment, financial, or any other type of advice.
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