SEC Probes Jump Crypto President's Alleged Secret Deal with Terraform Labs

According to Blockworks, the US Securities and Exchange Commission (SEC) has investigated whether Jump Crypto's president, Kanav Kariya, engaged in a secret agreement with Terraform Labs' Do Kwon during the collapse of stablecoin TerraUSD. The SEC's ongoing civil suit against Terraform Labs alleges that Kwon perpetrated a fraudulent scheme worth $40 billion through unregistered securities LUNA and UST. In a recently unsealed deposition, SEC counsel Devon Staren suggested that Kwon and Kariya made a deal on May 23, 2021, weeks after UST had depegged. The terms of the alleged deal were that Jump would help restore UST's peg by purchasing the token, and in exchange, Kwon would amend Jump's LUNA loan agreement and lift the vesting conditions. Kariya invoked his right to resist self-incrimination in response to Staren's questioning, as he did eight other times in the unsealed section of the deposition. Staren's line of questioning appears to hint at similar allegations made in a civil class action suit filed against Jump Crypto for allegedly manipulating the price of UST and AnchorUST between May 23, 2021, and May 31, 2022. Anchor is a lending platform built on Terra where UST holders can earn yields on their tokens. Plaintiffs filed the class action in an Illinois federal court in May, citing billions of dollars in alleged losses. The class action lawsuit complaint stated that Jump later resold the LUNA tokens into the market at a staggering profit of over $1.28 billion. In the SEC's case against Terraform Labs, both parties have motioned for a summary judgment. The defense argues that the SEC has not sufficiently proven that Kwon violated securities laws, and the SEC countered that token holders were 'clearly' making an investment.