Game Developer Sues Jump Trading Over Crypto Manipulation
FractureLabs sues Jump Trading, accusing the firm of manipulating the DIO token price during a 2021 deal, leading to significant financial losses.
FractureLabs, a game development company, has filed a lawsuit against Jump Trading, accusing the firm of manipulating the price of the DIO token in 2021. The lawsuit alleges that Jump Trading, a well-known firm specializing in algorithmic trading, exploited its role in managing the token's market to profit from sudden price changes.
FractureLabs had hired Jump Trading as its market maker during the token sale for Decimated (DIO) on the Huobi exchange, with the agreement that Jump would maintain the price of DIO within a specific range. However, according to the lawsuit, the token’s value experienced a sharp rise followed by a significant drop, with Jump Trading allegedly profiting from this price manipulation.
The lawsuit claims that Jump Trading liquidated its DIO holdings, generating millions in revenue by selling off tokens after the price surged. FractureLabs also revealed that it lent millions of DIO tokens to Jump as part of the deal. These tokens were later returned at a fraction of their original value, leading to significant losses for the game developer.
In addition to the lawsuit, the US Commodity Futures Trading Commission (CFTC) has opened an investigation into Jump Trading’s cryptocurrency trading practices. The CFTC is reviewing the firm’s involvement in the broader cryptocurrency market, including its market-making activities and investment strategies.
Jump Trading’s subsidiary, Jump Crypto, focuses on investing in cryptocurrency projects. While Jump Trading had early success with investments in several prominent blockchain projects, it has also faced challenges, particularly with its investments in other crypto ventures. The lawsuit and the investigation by the CFTC have brought increased scrutiny on Jump Trading’s practices in the cryptocurrency space.
FractureLabs hopes to secure compensation for the losses it incurred during the DIO token’s dramatic price swings, which it blames on Jump Trading’s market manipulation tactics. The case marks another chapter in the ongoing regulatory attention being given to crypto market practices, especially concerning market manipulation and the responsibilities of market makers.
