Jump Crypto Under US CFTC Investigation: Fortune

Chicago-based financial institution Jump Crypto has recently come under the radar of the Commodity Futures Trading Commission (CFTC) and is currently facing investigation.

The Concerns Raised About Jump

According to Fortune, the United States regulator is concerned about Jump Crypto ‘s involvement in crypto especially its digital asset trading and investment activities.

So far, there is no evidence of wrongdoing but for a very long time, Jump Crypto has been implicated in a couple of hacks and implosion. This forced the company to push back on its effort towards crypto, including withdrawing from the spot Bitcoin ETF race.

Jump launched its crypto division in September 2021, after establishing itself as an expert in algorithmic trading. In the last three years, the financial institution served as a top market maker across exchanges.

Its activities were often with crypto projects, providing them with liquidity for their newly launched tokens. Its incubation and engineering arm, which were created as the firm moved further higher the ladder, helped develop some top projects, including Wormhole, Pyth, and Firedancer.

Jump Crypto’s Woes in the Digital Asset Industry

However, Jump Crypto’s woes began with a few cracks in its operations including the $325 million hack of Wormhole, a decentralized finance platform. With FTX implosion in 2022, it was revealed that the Bahamian-headquartered exchange’s market marker lost up to $300 million.

Also, in the U.S. SEC’s lawsuit with Terraform Labs and Do Kwon, the regulator identified a U.S. trading firm that secretly propped up Terra’s peg in a near collapse.

Upon investigation, it turned out that Jump Crypto was the firm in question. Even though Terraform Labs and Kwon were charged and settled, the discovery did not translate to a lawsuit for Jump. This could have been due to jurisdiction restrictions. The SEC’s responsibility is primarily to oversee securities but much of Jump’s operations in the derivatives niche centers around crypto products and traditional commodities. This significantly aligns with the jurisdiction of the CFTC.

The investigation move on Jump Crypto reflects the regulator’s intensified effort towards combating regulatory violations. In May, CFTC Chairman Rostin Behnam revealed that more crypto regulation through crackdowns should be expected in 6-12 months. It is barely two months after the announcement was made and Jump Crypto is likely to face a major crackdown.

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