LFG audit raises questions about Jump Trading and Terra collapse
According to a new independent report, Luna Foundation Guard (LFG) transferred more than 52,000 bitcoin (BTC) from its reserves to Jump Trading as part of its efforts to defend the price of terraUSD (UST). However, observers have already started to point out that there are certain, crucial details missing.
The report by third-party auditing firm, JS Held, was commissioned by LFG, it says, to answer a number of questions, namely:
- Were any LFG funds misappropriated, embezzled, or stolen?
- Were any LFG funds used to benefit insiders?
- Does LFG hold funds other than its publicly declared wallets?
- Were any of LFG’s funds frozen?
The 31-page document details how LFG spent $2.8 billion trying to save UST and how Terra developer Terraform Labs spent around $613 million trying to prop up the failing coin.
Their efforts were ultimately in vain, however, and the entire Terra ecosystem imploded in May.
Despite the details about LFG and TFL’s spending, as pointed out by Twitter user FatManTerra, the audit raises a number of questions.
For starters, the report says that no funds were taken by insiders, but there’s no explanation as to why 47,189 BTC was given to Jump. Indeed, there are no details regarding Jump’s trades at all (this is also referenced in the report’s small print).
Tweeting about this anomaly, FatMan said: “TFL sends Jump BTC, and Jump sends TFL UST… That’s it. No trade logs for this tranche! There are several issues here, as Jump was heavily involved in the Terra ecosystem and could have simply cleaned up their own book. Despite claiming full transparency, this part is omitted,” (our emphasis).
Read more: Jump Crypto forced to save Solana with $320M bailout of its own company
Jump founder also sits on LFG council
The fact that Jump Trading was used by LFG to do its BTC trades is particularly noteworthy, not least of all because Kanav Kariya, a member of the LFG governing council, is one of the two co-founders of Jump Crypto, Jump Trading’s crypto-specific arm.
Jump has also previously been embroiled in major token-related controversies. Back in February, the company paid $320 million to bail out its own token bridge Wormhole when hackers exploited a bug to mint hundreds of millions of dollars worth of Solana-based Wrapped ether (WETH) without posting the required ether collateral.
And this week, Protos reported how investors in Robinhood fear that the fallout from the collapse of Sam Bankman-Fried’s exchange FTX could affect trades being processed by Jump Crypto.
As a result, Catherine Wood’s Ark ETF Trust has disclosed $10 million in Robinhood share sales in favor of $21 million purchases of Coinbase shares. JP Morgan has downgraded Robinhood from Neutral to Underweight.
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