Manhattan federal prosecutors have allegedly slid into the DMs of employees at Jane Street and Jump Trading to determine if market manipulation occurred in the collapse of Terra’s stablecoin, Bloomberg reports.
According to an unnamed source familiar with the matter, Telegram messages by Jane Street and Jump are being combed in relation to a potential bailout of TerraUSD in May, which never took place. Instead, the entire Terra ecosystem collapsed.
The two trading firms hold significant sway in the markets. US authorities believe their ties to Terra’s collapse run deep. Several Jane Street traders went on to work in top roles at crypto exchange FTX and trading firm Alameda Research before they collapsed in November — including Sam Bankman-Fried himself.
There’s no evidence that Jane Street had any involvement in the misdeeds former employees committed at FTX. However, it’s likely that Jane Street did have a heavy hand in the collapse of Terra’s stablecoin, TerraUSD.
Read more: A look at Jump Crypto and its shady past
At the end of February, researcher Igor Igamberdiev identified three wallet addresses likely belonging to Jane Street, suggesting that the trading firm owns the notorious ‘Wallet A’ that contributed significantly to the depegging of TerraUSD in May 2022.
Like Jane Street, Jump’s crypto arm held deep ties to Sam Bankman-Fried and his blockchain of choice, Solana. A complaint by the Securities and Exchange Commission (SEC) revealed an unnamed trading firm — supposedly Jump Crypto — bailed out TerraUSD to restore its peg in 2021, getting a sweet discount on LUNA tokens in return. In May, Jump Crypto reportedly made $1.3 billion from the collapse of Terra’s ecosystem.
- Terra’s founder Do Kwon is a wanted fugitive who was last spotted in Serbia.
- Authorities say Kwon’s cryptocurrencies luna and terra were unregistered securities.
- Well-connected insiders like Jump Crypto benefited while regular investors lost billions.