Jump Trading accused of pump-and-dump scheme in DIO token lawsuit Jump Trading accused of pump-and-dump scheme in DIO token lawsuit
The market maker allegedly dumped the DIO token and bought it back, profiting from FractureLabs' efforts to raise funds.
2 min read
Updated: Oct. 17, 2024 at 1:01 am UTC
Cover art/illustration via CryptoSlate. Image includes combined content which may include AI-generated content.
FractureLabs, the developer of the online game “Decimated,” has filed a lawsuit against Jump Trading. accusing the firm of market manipulation, Bloomberg News reported on Oct. 16.
The complaint alleges that Jump engaged in a “pump and dump” scheme with the game’s native token, DIO, which is traded on crypto markets.
Allegations
According to the filing, FractureLabs planned to raise funds through an initial offering of DIO on HTX — formerly Huobi — and hired Jump as a market maker in 2021.
As part of their agreement, FractureLabs loaned 10 million DIO tokens to Jump’s subsidiary and sent 6 million tokens to HTX for the sale.
After the token’s price climbed to $0.98, Jump allegedly liquidated its holdings, causing DIO to crash to less than half a cent. The firm then repurchased the tokens at a fraction of the price, returned them to FractureLabs, and canceled its market-making contract.
FractureLabs asserts that Jump misrepresented its intentions and violated an agreement to maintain the token’s price within a specified range under Huobi’s listing conditions. As a result, HTX withheld most of a $1.5 million Tether (USDT) deposit made by FractureLabs, which the company is now seeking through arbitration.
While HTX has declined to comment due to ongoing litigation, it emphasized its commitment to operating within legal frameworks.
Past controversies
This is the latest controversy involving Jump Crypto. In the lawsuit moved by the US Securities and Exchange Commission (SEC) against Terraform Labs in February 2023, the regulator stated its belief that Jump was “instrumental” in the downfall of the UST stablecoin, USTC.
Although Jump is not a defendant in the Terraform Labs case, the regulator stated that when UST lost parity with the US dollar for the first time in May 2021, Jump allegedly helped Terraform Labs reestablish the peg.
In June, the US Commodity Futures Trading Commission (CFTC) reportedly started investigating Jump’s activities in the crypto market. However, the regulator’s probe does not imply any misconduct by the market maker.
Mentioned in this article
Author 
Gino Matos
Gino Matos is a law school graduate and a seasoned journalist with six years of experience in the crypto industry. His expertise primarily focuses on the Brazilian blockchain ecosystem and developments in decentralized finance (DeFi).
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Launched in 2014, Tether is a blockchain-enabled platform designed to facilitate the use of fiat currencies in a digital manner.
TerraClassicUSD
$0.02113
TerraUSD (UST) is a decentralized and algorithmic stablecoin on the Terra blockchain.
Jump Crypto
Jump Crypto is a division of Jump Trading Group, a research-driven quantitative trading firm and one of the largest traders, by volume, across traditional asset classes.
HTX
Huobi, a virtual asset exchange, launched a revised branding strategy on September 13, 2023, where “Huobi” will be rebranded as “HTX.” “H” stands for Huobi, “T” represents TRON with a commitment to being all in TRON, and “X” stands for the exchange.
Terraform Labs
Terraform Labs is a startup that created Terra, a blockchain protocol and payment platform used for algorithmic stablecoins.
