The Commodity Futures Trading Commission (CFTC) has launched an investigation into Chicago-based trading firm Jump’s participation in the crypto market, focusing on its trading and investment activities, according to an undisclosed source close to the folder, like reported by Fortune Magazine.
Hacks and Crashes Haunt Jump Trading
The investigation comes after a tumultuous period for Jump, known for its expertise in algorithmic trading. However, the company faced setbacks, including a series of hacks and collapses.
The company suffered a major blow with the hack of Wormhole, a decentralized finance (DeFi) platform designed to connect separate blockchains, worth $325 million.
Additionally, following the collapse of FTX in November 2022, it was revealed that Jump suffered nearly $300 million in losses as the primary market maker on the failed crypto exchange.
Further controversy arose when the United States Securities and Exchange Commission (SEC) filed a lawsuit against Terraform Labs and its founder Do Kwon in February 2023, related to the failure of the TerraUSD stablecoin.
The SEC case concluded with a jury decision in favor of the agency in April, following testimony from a former Jump employee who acted as a whistleblower.
Crypto Crackdown Expands
In March 2023, the DOJ filed a criminal complaint against Do Kwon, naming Jump as a “U.S.-based proprietary trading company” that played a role in maintaining Terra’s foothold. However, like the SEC lawsuit, no allegations of wrongdoing or accusations have been leveled against Jump.
Jump subsequently scaled back its involvement in the crypto sector, splitting two high-profile projects and withdrawing from the race for a spot in the Bitcoin ETF market.
The CFTC investigation into Jump’s crypto activities is the latest investigation by a federal agency in the United States. While it is unclear whether the agency plans to charge the company, it is important to note that many of Jump’s activities, including crypto products, fall under the CFTC’s jurisdiction.
As a Bitcoinist reportedCFTC Chairman Rostin Behnam has indicated that cryptocurrency companies can expect a new round of enforcement action.
Featured image of DALL-E, chart by TradingView.com
