Jump Crypto subsidiary Tai Mo Shan settles with SEC for $123 million
Tai Mo Shan, a subsidiary of Jump Crypto, settled with the SEC for $123 million on December 20 for misleading investors about the stability of the TerraUSD (UST) algorithmic stablecoin prior to its collapse. The SEC stated that Tai Mo Shan entered an agreement with Terraform to buy Terra LUNA at a discount in 2021 and purchased approximately $20 million in UST to maintain its 1:1 peg to the US dollar. The collapse of UST in May 2022, triggered by a significant sell-off, resulted in a loss of its dollar peg and led to widespread panic among investors. The market capitalization of UST exceeded its underlying LUNA reserves, indicating insufficient backing. This event prompted investigations into Terraform Labs and founder Do Kwon, resulting in charges and a $4.4 billion settlement. The fallout influenced stablecoin regulations, including the Lummis-Gillibrand Stablecoin Act of 2024, which bans algorithmic stablecoins.
