SEC Takes Action Against Jump Subsidiary with Cease-and-desist Order Over Alleged Securities Law Violations

SEC Issues Jump Subsidiary With Cease-and-desist Order

The Securities and Exchange Commission (SEC) has taken action against Jump subsidiary Tai Mo Shan Limited, issuing a cease-and-desist order for alleged violations of securities laws in connection with Terraform Labs’ crypto assets LUNA and UST. The company has agreed to pay over $120 million in disgorgement, interest, and penalties.

The SEC claims that Tai Mo Shan acted as a statutory underwriter for Terraform Labs’ crypto assets without proper registration, offering and selling LUNA on US-based platforms from January 2021 to May 2022. The firm profited significantly from these transactions.

Furthermore, the SEC alleges that Tai Mo Shan engaged in a trading strategy that added to the circulating supply of LUNA, violating Sections 5(a) and 5(c) of the Securities Act.

During UST’s de-pegging in May 2021, Tai Mo Shan entered into an agreement with Terraform Labs to support UST’s price, purchasing over $20 million of UST. This action is believed to have created a false impression that Terraform’s algorithm was effectively stabilizing its price. The SEC maintains that Tai Mo Shan should have known that this activity would mislead the market about the stability of UST’s peg and the effectiveness of Terraform’s algorithm.

As a result, Tai Mo Shan has been ordered to pay $73.5 million in disgorgement, $12.9 million in interest, and a $36.7 million civil penalty. The funds will be distributed to harmed investors.

Industry experts believe that this case highlights the need for greater oversight of crypto markets to protect investors from future harm.

Source: fullycrypto.com