Trading Firm Jump Crypto Under US CFTC Investigation

The Commodity Futures Trading Commission (CFTC) is investigating Chicago-based trading firm Jump Crypto Trading‘s involvement in cryptocurrency. This investigation, which is not an indication of wrongdoing, comes after a tumultuous period for Jump.

The company, renowned for its expertise in algorithmic trading, emerged as a significant market maker and investor in the crypto industry.

However, its prominence in the space was marred by its involvement in several high-profile hacks and collapses, prompting a scaling back of its crypto operations. This includes the spin-off of two prominent projects and withdrawal from the spot Bitcoin ETF race.

Jump’s involvement in cryptocurrency began with the public launch of its crypto division, Jump Crypto, in September 2021, though the firm had been active in the space for several years prior.

The firm’s involvement was multifaceted, ranging from serving as a top market maker across exchanges to becoming a leading venture investor in the space. Notably, Jump played a key role in the development of several prominent projects, including Wormhole, Pyth, and Firedancer, through its incubation and engineering arm.

$325 million Wormhole Hack Impact on Jump Crypto

However, Jump’s involvement in cryptocurrency was not without its challenges. The firm faced a significant setback with the $325 million hack of Wormhole, a decentralized finance platform.

Despite the loss, Jump’s deep financial reserves allowed it to swiftly recover from the incident. Further, Jump’s role as a top market maker on the FTX exchange resulted in a nearly $300 million loss following the exchange’s collapse in late 2022.

In February 2023, the Securities and Exchange Commission (SEC) filed a lawsuit against Terraform Labs and its founder, Do Kwon, alleging that a U.S. trading firm had secretly propped up Terra’s peg during a near collapse in 2021.

While the lawsuit did not name Jump directly, subsequent reports and filings revealed the firm as the trading entity involved. Following a trial this spring, a jury sided with the SEC.

While the SEC investigates securities, the CFTC’s jurisdiction encompasses much of Jump’s activities, including its involvement in crypto products and traditional commodities.

The CFTC’s investigation into Jump’s crypto business reflects a growing trend of federal agencies scrutinizing the crypto industry, as evidenced by the SEC’s subpoenas to crypto firms regarding their dealings with the Ethereum Foundation.