Katherine Ross

A subsidiary of Jump Trading was named in the <a href="https://blockworks.co/news/sec-charges-do-kwon-terraform-labs-with-fraud-misleading-investors">SEC’s lawsuit against Terraform</a> Labs and Do Kwon.



In <a href="https://www.sec.gov/Archives/edgar/data/1783879/000162828021017920/R14.htm">SEC</a> documents, the commission named Tai Mo Shan as a member of the Jump Trading Group. The entity was also one of Robinhood’s largest market makers in 2021.



The documents list Tai Mo Shan as a Cayman Islands-exempted company with a Chicago, Illinois, address.



According to <a href="https://www.harneys.com/media/j40bf0kn/c01_exempted_companies_in_the_cayman_islands.pdf">Harneys</a>, a Cayman Islands-exempted company is a company that has been registered under the notion that the “operations of the company are to be carried on mainly outside the Cayman Islands.”&nbsp;



In the new documents, filed on Friday, May 12, Tai Mo Shan and Terra entered into a <a href="https://cms.blockworks.co/wp-content/uploads/2023/05/Tai-Mo-Shan-2019.pdf">contract</a> in 2019. 



Per the document, Terra agreed to loan Tai Mo Shan 30 million <a href="https://blockworks.co/price/luna">LUNA</a> in November 2019 with a 2% annualized interest fee payable in Luna.&nbsp;



The contract was signed by Matthew Hinerfield, who is listed on <a href="https://www.linkedin.com/in/matthew-hinerfeld-0050112/">LinkedIn</a> as general counsel for Jump, and Do Kwon.



An <a href="https://cms.blockworks.co/wp-content/uploads/2023/05/Tai-Mo-Shan-2021.pdf">amended</a> contract between Terra and Tai Mo Shan, this one dated July 2021, was included in the SEC’s filings. Jump agreed to deliver over 61 million to Tai Mo Shan through monthly installments.



In 2020, Do Kwon sent an <a href="https://cms.blockworks.co/wp-content/uploads/2023/05/Jump-Doc.pdf">email</a> to Terra’s investors informing them of an arrangement it entered into with Jump Trading. 



Per the email, Jump was loaned 30 million Luna in exchange for Jump deploying resources to “improve liquidity of Terra and Luna” and participating in “on-chain governance.”



The documents show over $1 billion in profit through its Terraform dealings.&nbsp;



Neither Jump nor Tai Mo Shan have been accused of wrongdoing in connection to TerraUSD in the SEC lawsuit.



Jump, however, is facing a <a href="https://blockworks.co/news/jump-crypto-terra-lawsuit">class action lawsuit alleging</a> that the trading company aided and abetted a Terra fraud scheme and earned $1.3 billion from manipulating Terra.



“Plaintiff’s allegations are based upon personal knowledge as to himself and his own acts, and upon information and belief as to all other matters based on the investigation conducted by and through Plaintiff’s attorneys, which investigation included, among other things, a review of the whitepaper of the digital assets at issue, press releases, media reports, and other publicly disclosed reports and information about Defendants,” the lawsuit states.



Blockworks has not verified the allegations against Jump.



<a href="https://blockworks.co/news/one-year-since-terra">Last summer</a>, the algorithmic stablecoin TerraUSD depegged from the US dollar, and wiped $40 billion from investor wallets.&nbsp;



The SEC charged Terraform and Do Kwon earlier this year, alleging that Kwon and Terraform “aggressively marketed” its cryptocurrencies to US investors by “posting information and promotional materials to accounts on several publicly accessible online social media platforms, such as Twitter accounts, blog posts, YouTube, and messaging applications like Telegram.”



<a href="https://blockworks.co/news/do-kwon-indicted-for-fraud">Both the US</a> and South Korea have <a href="https://blockworks.co/news/do-kwon-terra-founder-extradition-us-south-korea">sought extradition for Do Kwon</a>, who is currently out on bail in Montenegro on falsified documents charges.&nbsp;



<a href="https://blockworks.co/news/do-kwon-arrested">Kwon was arrested</a> in March and faces a June trial date.



Jump did not immediately respond to a request for comment.



<hr class="wp-block-separator has-alpha-channel-opacity"/>



Start your day with top crypto insights from David Canellis and Katherine Ross. <a href="https://blockworks.co/newsletter/empire">Subscribe to the Empire newsletter</a>.



Explore the growing intersection between crypto, macroeconomics, policy and finance with Ben Strack, Casey Wagner and Felix Jauvin. <a href="https://blockworks.co/newsletter/onthemargin">Subscribe to the Forward Guidance newsletter</a>.



Get alpha directly in your inbox with the <a href="https://blockworks.co/newsletter/research">0xResearch newsletter</a> — market highlights, charts, degen trade ideas, governance updates, and more.



The Lightspeed newsletter is all things Solana, in your inbox, every day. <a href="https://blockworks.co/newsletter/lightspeed">Subscribe to daily Solana news</a> from Jack Kubinec and Jeff Albus.

What is Tai Mo Shan? Jump Trading Subsidiary Named in SEC’s Terra Lawsuit

Sebastian Sinclair

A potential decline in the reserve status of the US dollar is causing investors and nations to explore alternatives to the greenback, including commodities, both physical and digital — such as bitcoin (<a href="https://blockworks.co/price/btc" target="_blank" rel="noreferrer noopener">BTC</a>).



This gradual shift in the global financial landscape is benefiting the crypto market; bitcoin has often shown an inverse correlation with the US dollar.&nbsp;



Over the past 24 hours, Bitcoin is down slightly (-0.6%) to about $29,000, after erasing most of Wednesday’s rally which saw the asset <a href="https://blockworks.co/news/crypto-related-stocks-soar">rise as much as 9%</a> on the day.



<h2 class="wp-block-heading">A Twitter tizzy</h2>



A -7% swan dive between 3:00 and 4:00 pm ET was preceded by a <a href="https://twitter.com/ArkhamIntel/status/1651299804423520260?s=20" target="_blank" rel="noreferrer noopener">tweet</a> from crypto data analytics provider Arkham Intelligence, which cited on-chain data to claim that Jump Trading deposited $26.6 million in BTC to crypto exchanges. Blockworks reached out to Jump for comment.



After the sell-off, Twitter and Telegram-based news aggregator Tier10k, <a href="https://twitter.com/tier10k/status/1651317391626846214?s=20" target="_blank" rel="noreferrer noopener">attributed</a> an on-chain alert to Arkham indicating bitcoin from wallets associated with Mt Gox and US government seizures were on the move.&nbsp;



Further on-chain analysis disputed the claim, and Arkham later chalked up the incident to <a href="https://twitter.com/ArkhamIntel/status/1651366459547713537?s=20" target="_blank" rel="noreferrer noopener">a misconfiguration</a> while pointing out the timing could not possibly have been responsible for the crypto market’s sudden reversal.



<figure class="wp-block-embed is-type-rich is-provider-twitter wp-block-embed-twitter"><div class="wp-block-embed__wrapper">
<blockquote class="twitter-tweet" data-width="550" data-dnt="true">We have conducted an investigation of the DB Alert situation, and determined that the Arkham alerts were sent accurately in this case. DB set two alerts on all Bitcoin transactions above $10k USD, with no counterparties set, then named the alerts “Mt Gox” and “US Gov”. When we… <a href="https://t.co/8OITiygNhL">pic.twitter.com/8OITiygNhL</a>&mdash; Arkham (@ArkhamIntel) <a href="https://twitter.com/ArkhamIntel/status/1651366459547713537?ref_src=twsrc%5Etfw">April 26, 2023</a></blockquote><script async src="https://platform.twitter.com/widgets.js" charset="utf-8"></script>
</div></figure>



The price of bitcoin subsequently rebounded over the next 8 hours.



<h2 class="wp-block-heading">Medium-term trends</h2>



Over a 30-day period, bitcoin&#8217;s value has increased as the dollar has weakened, demonstrating its potential as a digital store of value alternative to gold.&nbsp;



<figure class="wp-block-image size-large"><img loading="lazy" decoding="async" width="2560" height="1175" src="https://blockworks-co.imgix.net/wp-content/uploads/2023/04/btc-dxy-scaled.jpg?w=1024&amp;h=1024" alt="" class="wp-image-53633" srcset="https://blockworks-co.imgix.net/wp-content/uploads/2023/04/btc-dxy-scaled.jpg?w=2560 2560w, https://blockworks-co.imgix.net/wp-content/uploads/2023/04/btc-dxy-scaled.jpg?w=300 300w, https://blockworks-co.imgix.net/wp-content/uploads/2023/04/btc-dxy-scaled.jpg?w=1024 1024w, https://blockworks-co.imgix.net/wp-content/uploads/2023/04/btc-dxy-scaled.jpg?w=768 768w, https://blockworks-co.imgix.net/wp-content/uploads/2023/04/btc-dxy-scaled.jpg?w=1536 1536w, https://blockworks-co.imgix.net/wp-content/uploads/2023/04/btc-dxy-scaled.jpg?w=2048 2048w, https://blockworks-co.imgix.net/wp-content/uploads/2023/04/btc-dxy-scaled.jpg?w=428 428w, https://blockworks-co.imgix.net/wp-content/uploads/2023/04/btc-dxy-scaled.jpg?w=470 470w, https://blockworks-co.imgix.net/wp-content/uploads/2023/04/btc-dxy-scaled.jpg?w=389 389w, https://blockworks-co.imgix.net/wp-content/uploads/2023/04/btc-dxy-scaled.jpg?w=80 80w" sizes="auto, (max-width: 2560px) 100vw, 2560px" /><figcaption class="wp-element-caption">BTC correlation to DXY; Source: TradingView</figcaption></figure>



Over a one-month period, the US dollar index (<a href="https://www.marketwatch.com/investing/index/dxy" target="_blank" rel="noreferrer noopener">DXY</a>), which measures the greenback relative to a group of other international currencies, has turned negative, down 0.48%. The DXY is now down 2.48%, data shows.



&#8220;Heavy geopolitical tensions and liquidity pumped into the US financial system through Quantitative Easing after COVID-19 have caused soaring inflation,&#8221; says Sylvia To, lead researcher at crypto exchange Bullish.



The DXY has been in a downtrend since September 2022 — a February bounce of roughly 4.5% has been completely erased in the wake of the US <a href="https://blockworks.co/tag/banking" target="_blank" rel="noreferrer noopener">regional banking turmoil</a>.



<h3 class="wp-block-heading">Seeking alternatives</h3>



Strong dollar dominance has put developing countries in a tough spot, as their USD-denominated debt has resulted in inflated debt-to-GDP ratios.



Countries like Russia, China, and the BRICS nations are considering alternatives due to concerns about the use of the world&#8217;s reserve currency as a political tool and the impact US sanctions have on the <a href="https://www.bloomberg.com/news/articles/2023-04-18/de-dollarization-is-happening-at-a-stunning-pace-jen-says#xj4y7vzkg?leadSource=uverify%20wall" target="_blank" rel="noreferrer noopener">global economy</a>.



As interest in bitcoin grows as an alternative to the dollar and a hedge against inflation, demand for digital assets may increase <a href="https://blockworks.co/news/crypto-stayed-green">over the long term</a>. More investors are likely to diversify their portfolios to <a href="https://www.bloomberg.com/professional/blog/bitcoin-may-replace-some-bonds-in-portfolios-as-debasement-hedge/" target="_blank" rel="noreferrer noopener">mitigate</a> currency risk.



In Argentina, BTC tapped its previous all-time high against the peso on April 14. The country’s central bank <a href="https://www.reuters.com/markets/rates-bonds/argentina-central-bank-debate-rate-hike-no-decision-yet-made-sources-2023-04-20/">raised</a> its benchmark interest rate to 81% in an effort to curb soaring inflation



Bitcoin&#8217;s <a href="https://charts.woobull.com/bitcoin-inflation/" target="_blank" rel="noreferrer noopener">inflation rate</a> has steadily declined to 1.75% since its inception more than a decade ago, thanks to its fixed supply of 21 million BTC and <a href="https://blockworks.co/news/bitcoin-halving-a-year-out">supply halving events that reduce miner rewards</a>.&nbsp;



Meanwhile, the US dollar&#8217;s <a href="https://ycharts.com/indicators/us_inflation_rate#:~:text=Basic%20Info,month%20and%208.54%25%20last%20year." target="_blank" rel="noreferrer noopener">inflation rate</a> has of late consistently decreased month-to-month, dropping from a peak of 9% in June 2022 to around 5% in March.



&#8220;The future of dollar dominance is the big question,&#8221; To added. &#8220;It&#8217;s really going to set the precedent for the space.&#8221;



Macauley Peterson contributed reporting.



<hr class="wp-block-separator has-alpha-channel-opacity"/>



Start your day with top crypto insights from David Canellis and Katherine Ross. <a href="https://blockworks.co/newsletter/empire">Subscribe to the Empire newsletter</a>.



Explore the growing intersection between crypto, macroeconomics, policy and finance with Ben Strack, Casey Wagner and Felix Jauvin. <a href="https://blockworks.co/newsletter/onthemargin">Subscribe to the Forward Guidance newsletter</a>.



Get alpha directly in your inbox with the <a href="https://blockworks.co/newsletter/research">0xResearch newsletter</a> — market highlights, charts, degen trade ideas, governance updates, and more.



The Lightspeed newsletter is all things Solana, in your inbox, every day. <a href="https://blockworks.co/newsletter/lightspeed">Subscribe to daily Solana news</a> from Jack Kubinec and Jeff Albus.

Weakening US Dollar Provides Tailwind For Bitcoin, Despite Rumor-Driven Flash Crash

Jacquelyn Melinek

<div id="highlights-block_61fc372ed49f7" class="highlights">
 <ul>
 <li>The total value locked on Solana fell about 12.3% from $8.55 billion Wednesday to $7.5 billion Thursday, according to DeFiLlama data</li>
 <li>The ether was exploited from a smart contract, not “taken” from an Ethereum address, a Wormhole admin said</li>
 </ul>
 
</div>



Wormhole’s parent company has dug the DeFi protocol out of a $320 million hole.



Jump Crypto replaced all 120,000 ether Wormhole lost Wednesday in the <a href="https://defiyield.app/rekt-database" target="_blank" rel="noreferrer noopener">second biggest decentralized finance hack</a> to date, a spokesperson told Blockworks. The decision by Jump Crypto, which is owned by Jump Trading, to replenish the missing funds may have headed off long-term damage to the Solana blockchain.



The total value locked (TVL) on Solana fell about 12.3% from $8.55 billion Wednesday to $7.5 billion Thursday, according to DeFi Llama <a href="https://defillama.com/chain/Solana?currency=USD" target="_blank" rel="noreferrer noopener">data</a>.



“[Jump Crypto] believes in a multichain future and that [Wormhole] is essential infrastructure,” the company wrote in a tweet. “That’s why we replaced 120k ETH to make community members whole and support Wormhole now as it continues to develop.”



Wormhole is one of the largest cross-chain bridges between Solana and other blockchains. It has over $1 billion in TVL and supports six blockchains: Terra, Solana, Ethereum, Binance Smart Chain, Avalanche and Polygon.



Its portal shut down for a few hours Wednesday as the company worked to <a href="https://twitter.com/wormholecrypto/status/1489233259808571401?s=20&amp;t=jTmhWwG1o9ca_pb3pgzw4g" target="_blank" rel="noreferrer noopener">patch the network vulnerability</a>.



By 8:30 am ET Thursday, the portal’s token bridge was again operational.&nbsp;



“All wETH has been restored,” a Wormhole admin, who goes by the username d231d, wrote in its Telegram group Wednesday.



The hacker’s Ethereum address hasn&#8217;t been used since transferring the tokens to their wallet,&nbsp;according to Etherscan <a href="https://etherscan.io/address/0x629e7da20197a5429d30da36e77d06cdf796b71a#internaltx" target="_blank" rel="noreferrer noopener">data</a>.



The ether was exploited from a smart contract, not “taken” from an Ethereum address, the admin said. The exploit took place over three different transactions, Blockworks <a href="https://cms.blockworks.co/in-second-largest-defi-hack-ever-blockchain-bridge-loses-320m-ether/" target="_blank" rel="noreferrer noopener">reported</a>.



When a user transfers assets between blockchains, the bridge steps in to lock the transaction and mint a wrapped version, such as wrapped ether (wETH), to its final chain.



Etherscan added a disclaimer to the address’ page: “There have been reports that this address is involved in the Wormhole network <a href="https://twitter.com/wormholecrypto/status/1489001949881978883" target="_blank" rel="noreferrer noopener">exploit</a>. Please proceed with caution.”



The protocol said it plans to release an in-depth report with further details “ASAP.”



Jump Crypto President Kanav Kariya said in a tweet that Wormhole would come out &#8220;stronger than ever.&#8221; 



<figure class="wp-block-embed is-type-rich is-provider-twitter wp-block-embed-twitter"><div class="wp-block-embed__wrapper">
<blockquote class="twitter-tweet" data-width="550" data-dnt="true">Jump put up 120k of it’s own ETH because we believe in Wormhole and want to support it in this stage of its development. And we&#39;re going to come out stronger than ever Detailed incident report from Wormhole to come soon&mdash; Kanav Kariya 🦬 (@KariyaKanav) <a href="https://twitter.com/KariyaKanav/status/1489312871456649228?ref_src=twsrc%5Etfw">February 3, 2022</a></blockquote><script async src="https://platform.twitter.com/widgets.js" charset="utf-8"></script>
</div></figure>



Wormhole said an ether contract was filled and will ensure that all wETH is backed in a 1-to-1 ratio to ensure exchangeability with the native ether.



Wormhole sent an on-chain <a href="https://www.notifi.xyz/messages/1497" target="_blank" rel="noreferrer noopener">message</a> to the hacker after the exploit, offering a reward for the return of the tokens.



It is still unclear whether the exploiter responded. Neither the admin or protocol immediately returned a request for comment.



<hr class="wp-block-separator has-alpha-channel-opacity"/>



Start your day with top crypto insights from David Canellis and Katherine Ross. <a href="https://blockworks.co/newsletter/empire">Subscribe to the Empire newsletter</a>.



Explore the growing intersection between crypto, macroeconomics, policy and finance with Ben Strack, Casey Wagner and Felix Jauvin. <a href="https://blockworks.co/newsletter/onthemargin">Subscribe to the Forward Guidance newsletter</a>.



Get alpha directly in your inbox with the <a href="https://blockworks.co/newsletter/research">0xResearch newsletter</a> — market highlights, charts, degen trade ideas, governance updates, and more.



The Lightspeed newsletter is all things Solana, in your inbox, every day. <a href="https://blockworks.co/newsletter/lightspeed">Subscribe to daily Solana news</a> from Jack Kubinec and Jeff Albus.

JumpTrading