Cryptocurrency President's Alleged Secret Deal with Terraform Labs Jumps SEC Probes

The US Securities and Exchange Commission (SEC) has reportedly investigated whether Jump Crypto's president, Kanav Kariya, and Terraform Labs' Do Kwon participated in a covert agreement during the collapse of stablecoin TerraUSD, according to Blockworks. Kwon, according to the SEC's ongoing civil litigation against Terraform Labs, committed a $40 billion fraud scheme via unregistered securities LUNA and UST. SEC counsel Devon Staren indicated in a recently unsealed deposition that Kwon and Kariya reached an agreement on May 23, 2021, weeks after UST depegged. In exchange for Jump's assistance in restoring UST's float through the purchase of the token, Kwon was to amend Jump's LUNA loan agreement and remove the vesting conditions, according to the purported agreement.

In response to Staren's inquiries, Kariya exercised his right to resist self-incrimination, a motion he repeated eight times throughout the unsealed segment of the deposition. Comparable accusations were lodged against Jump Crypto in a civil class action lawsuit between May 23, 2021, and May 31, 2022, alleging that the company manipulated the prices of UST and AnchorUST. Staren's line of inquiry seems to allude to these allegations. Anchor is a Terra-based lending platform where tokens held by UST holders can generate interest. In May, the plaintiffs initiated the class action lawsuit in a federal court in Illinois, alleging losses amounting to billions of dollars. According to the complaint in the class action lawsuit, Jump subsequently resold the LUNA tokens for an astounding profit of more than $1.28 billion. Both parties involved in the SEC's lawsuit against Terraform Labs have filed motions seeking summary judgement. The defence contends that the SEC's proof regarding Kwon's violation of securities laws is insufficient. In response, the SEC asserts that token holders were "ostensibly" investing.