Over the years, Jump Crypto, the crypto-specific arm of Chicago-headquartered trading firm Jump Trading, has worked alongside some of the most prominent firms and individuals in the crypto space. However, it’s also been embroiled in its fair share number of high-profile controversies.
Jump’s ties to FTX
Jump and FTX go way back and the relationship is a deep one. However, the links haven’t always been viewed favorably. Indeed, Jump was accused of colluding with Sam Bankman-Fried’s Alameda Research on seed funding rounds and yield farming investments.
It’s also been alleged that Jump withdrew $300 million in assets from FTX the day before the exchange paused withdrawals. That wallet spent a few days routing USDT and USDC to two other Ethereum addresses. It also routed thousands of ETH to at least two other wallets.
To be fair, Jump has acknowledged its exposure to FTX but maintains that its finances were “managed within accordance with our risk framework.”
Jump previously had to bail out its own company
In February 2022, Jump Crypto paid $320 million to bail out token bridge Wormhole after hackers stole $325 million in Wormhole-wrapped ether on Solana. How had it acquired those funds? According to Jump Trading president Dave Olsen, it bought 120,000 ETH, which was then worth $3,000 per ETH. This eventually led to rumors that it could have dipped into digital assets belonging to Menlo Park-based exchange Robinhood to cover Wormhole’s losses.
Wormhole acts as an intermediary for crypto asset swaps between Ethereum (ETH) and Solana (SOL) blockchains, allowing users to transform Ethereum tokens into Solana-bound ones and vice versa.
But smart contract hackers exploited a bug to mint hundreds of millions of dollars worth of Solana-based Wrapped ether (WETH) without posting the required ether collateral.
Its president has close links to now-defunct Terra
Kanav Kariya became Jump Crypto’s president in September 2021 after a stint as an intern at Jump Trading Group’s digital asset division.
Under Kariya’s watch, Jump began developing tools like Pyth, which provides real-time asset pricing data for DeFi applications. Jump has also continued its support for Solana, agreeing to develop upgrades for Solana’s software and build a new validator client.
As well as heading up Jump Crypto, Kariya is also a member of Luna Foundation Guard’s (LFG) governing council. This is significant because, as previously reported by Protos, LFG transferred more than 52,000 bitcoin (BTC) from its reserves to Jump Trading in an effort to defend the price of terraUSD (UST).
According to a recent independent report, however, Jump provided no details about the transactions it made.
The company has made some interesting decisions
In the wake of the FTX meltdown, Kariya published a number of tweets that led to people calling for greater transparency. However, he seems to be ignoring them beyond acknowledging that they were “down bad.”
In addition, Jump Crypto reportedly sued a Carl Sagan fan for the Wormhole.com domain and, alongside FTX, co-led Coral’s $20 million funding round. Coral is building developer tools for Solana, including the smart contract developer framework Anchor and what it calls “web3’s iPhone.”