Jump Crypto Subsidiary Agrees to Pay $123 Million to SEC

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On December 20, Tai Mo Shan, a subsidiary of Jump Crypto, reached a settlement with the United States Securities and Exchange Commission (SEC) for a sum of $123 million.

This was in response to allegations that Tai Mo Shan had misled investors about the stability of the algorithmic stablecoin TerraUSD (UST), which eventually collapsed. In 2021, Tai Mo Shan entered into an agreement with Terraform to purchase Terra LUNA at a significant discount.

As part of this agreement, Tai Mo Shan also bought $20 million worth of UST to maintain its 1:1 peg with the US dollar.

However, the SEC found that the collapse of UST had a negative impact on the crypto markets and resulted in significant losses for investors. SEC Chair Gary Gensler commented on the situation, stating that regardless of the label, participants in the crypto market should abide by securities laws and not deceive the public.

This collapse of TerraUSD in May 2022 had far-reaching consequences for the crypto community and played a significant role in shaping stablecoin regulations, such as the Lummis-Gillibrand Stablecoin Act of 2024, which prohibits algorithmic stablecoins. Prior to its collapse, TerraUSD was the third-largest stablecoin by market capitalization.