CFTC Investigating Jump Crypto

The Commodity Futures Trading Commission is investigating Chicago-based trading firm Jump’s involvement in crypto, including inquiries into its trading and investment activities, according to a person familiar with the matter.

The investigation, which does not constitute evidence of wrongdoing, comes after three turbulent years for Jump. The company is known for its expertise in algorithmic trading and, more recently, as one of the most active market makers and investors in the crypto sector before being involved in a series of hacks and busts. Jump has since scaled back its crypto efforts, including spin two of its flagship projects and to unsubscribe of the Bitcoin ETF spot race.

Representatives for the CFTC and Jump declined to comment.

Business woes

Jump has been known for years as one of the major players in the secretive world of high-frequency trading. In September 2021, she made headlines with the public announcement of its crypto division, Jump Crypto, even though the company had been quietly active in the field for several years. Jump named Kanav Kariya, a former intern then in his 20s, as team president, catapulting him into one of the industry’s most high-profile roles.

Jump has played a key role in the nascent sector, as a leading market maker across exchanges, often working with crypto projects to provide liquidity for their newly launched tokens. The company also became one of the leading venture capitalists in the field, and established an incubation and engineering arm that helped develop high-profile projects including WormholePyth and Firedancer.

However, cracks soon began to appear in Jump’s prodigious operation, including the $325 million Wormhole hack, a decentralized financial platform designed as a bridge between different blockchains. Jump quickly plugged the hole, illustrating the depth of its balance sheet. After FTX collapsed in late 2022, Jump was quickly revealed to be one of the top market makers on the exchange, losing nearly $300 million, according to the book Going Infinite by Michael Lewis.

Jump was once again embroiled in controversy during the February 2023 SEC meeting. trial against Terraform Labs and its founder Do Kwon, who created the failed TerraUSD stablecoin. In its complaint, the SEC alleged that a U.S. trading company secretly supported the Terra anchor during a near collapse in 2021. deposits—got out the company under the name Jump. The SEC charged Terraform and Kwon with fraud after they publicly claimed the ankle was naturally restored, but did not file charges against Jump. After a trial in the spring, which included testimony from a former Jump employee who was Alert launcher for the SEC, a jury face with the agency in April.

In March 2023, the Ministry of Justice deposit a criminal case against Kwon. Like the SEC’s previous lawsuit, the complaint referred to Jump as a “U.S.-based proprietary trading firm” that helped maintain Terra’s foothold but, again, did not allege any wrongdoing or did not file a complaint against the company. A lawyer for Kwon did not respond to a request for comment.

The CFTC’s investigation into Jump’s crypto activities mirrors the latest investigation by a federal agency, although it was unclear whether the agency was considering charges against the company. Unlike the SEC, which oversees securities, much of Jump’s derivatives business, from crypto products to traditional commodities, falls under the CFTC’s jurisdiction. Speaking at the Milken Conference in May, CFTC Chairman Rostin Behnam said that cryptocurrency companies can expect to see “another round of enforcement action.”

Regulatory agencies regularly engage in investigations of companies within their jurisdiction. In March, Fortune reported that the SEC had sent subpoenas to crypto companies regarding their dealings with the Ethereum Foundation, although no charges have yet been filed.

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