SEC Charges Jump Crypto Subsidiary Tai Mo Shan
The Securities and Exchange Commission of the United States has filed charges against Tai Mo Shan Ltd., a subsidiary of Jump Crypto Holdings, for its involvement in the collapse of Terra’s algorithmic stablecoin, terrausd (UST) in 2022.
As part of a recent settlement, Tai Mo Shan has agreed to pay $123 million to settle allegations of violating US securities laws and deceiving investors.
The main issue at the heart of the SEC’s case is that Tai Mo Shan took deceptive measures to maintain UST’s $1 peg, which misled investors about the stablecoin’s stability.
The complaint states that the company spent over $20 million buying UST when its value fell below $1, giving the false impression that Terra’s algorithmic mechanisms were working as intended.
In reality, these actions only masked the underlying instabilities of the system. Furthermore, the SEC claims that Terraform Labs, the company behind Terra, incentivized Tai Mo Shan to make these purchases by offering discounted options for its sister token, Luna.
