UST Cryptocurrency Class Action Lawsuit - UST; aUST
Case Summary
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Robbins Geller Rudman & Dowd LLP and Selendy Gay Elsberg PLLC have filed a class action lawsuit seeking to represent purchasers of digital assets UST or aUST in the United States between May 23, 2021 and May 31, 2022, inclusive (the “Class Period”). Captioned Kim v. Jump Trading, LLC, No. 23-cv-02921 (N.D. Ill.), the UST cryptocurrency class action lawsuit charges Jump Trading, LLC and President of Jump Trading’s cryptocurrency arm Jump Crypto, Kanav Kariya, with violations of the Commodity Exchange Act, Commodity Futures Trading Commission regulations, and common law unjust enrichment.
If you purchased UST or aUST in the United States during the Class Period and would like to learn more, you can provide your information in the form on this page. You can also contact attorney Eric I. Niehaus of Robbins Geller by calling 800/449-4900 or via e-mail at ericn@rgrdlaw.com.
CASE ALLEGATIONS: Jump Trading was an early partner and financial backer of Terraform Labs Pte. Ltd. (“Terraform”) and its founder, Do Kwon. In 2019, Terraform began selling the digital assets LUNA, UST, and aUST. While LUNA was intended to function like other digital assets, such as Bitcoin, with a fluctuating value based on market conditions, UST would purportedly function as a “stablecoin,” with a value continuously pegged at $1, which was designed to appeal to the public as a safe place to store crypto assets.
As the UST cryptocurrency class action lawsuit alleges, between November 2019 and September 2020, Jump Trading entered into a series of agreements with Terraform and its affiliates to borrow tens of millions of LUNA tokens from Terraform and to provide market-making services for transactions in LUNA, UST, and aUST, in exchange for the opportunity to purchase LUNA tokens at a steep discount, which could then be resold into the market to further Jump Trading’s profit.
But, as the UST cryptocurrency class action lawsuit alleges, in May 2021, Terraform’s purported algorithm failed to keep the price of UST pegged to $1. Rather than publicly acknowledging the inability of Terraform’s algorithm to maintain UST’s advertised peg price (which was fundamental to the perceived market value of UST and aUST), Terraform and Do Kwon secretly schemed with Jump Trading to manipulate the market prices for UST and aUST by making secret, coordinated trades to prop up UST to its $1 peg. As part of the scheme, Jump Trading purchased more than 62 million UST tokens between approximately May 23 and May 27, 2021, causing UST’s price to artificially inflate to $1 and causing a corresponding rise in aUST’s price. Defendants then allegedly concealed and misrepresented this manipulative scheme throughout the Class Period.
The UST cryptocurrency class action lawsuit further alleges that to incentivize and reward Jump Trading for its manipulation of the markets for UST and aUST, Terraform and Do Kwon agreed to modify the parties’ prior agreements and instead unconditionally convey to Jump Trading more than 61.4 million LUNA tokens at a greater than 99% discount from their then-current market price. Jump Trading later resold those LUNA tokens into the market at a staggering profit of over $1.28 billion.
According to the UST cryptocurrency class action lawsuit, defendants’ misconduct was not revealed until after the U.S. Securities and Exchange Commission (“SEC”) filed a complaint against Terraform and Do Kwon on February 16, 2023. Although the SEC complaint did not affirmatively name Jump Trading as the party that aided and abetted Terraform and Do Kwon in manipulating the prices of UST and aUST in May 2021, multiple individuals with knowledge of Jump Trading’s May 2021 intervention to manipulate the prices of UST and aUST have stated that the unnamed firm that aided Terraform and Do Kwon in their manipulation was in fact Jump Trading. Federal prosecutors have also reportedly begun investigating Jump Trading for possible market manipulation in connection with UST and Do Kwon was recently arrested in Montenegro as a fugitive from justice and charged in the Southern District of New York with commodities fraud and other crimes.
The plaintiff is represented by Robbins Geller and Selendy Gay, which have extensive experience in prosecuting cryptocurrency class actions. You can view a copy of the complaint by clicking here.
ABOUT ROBBINS GELLER’S CRYPTO TASK FORCE: Robbins Geller has been at the forefront of prosecuting cryptocurrency sector misconduct. Robbins Geller filed one of the first securities class actions against a crypto issuer, Dynamic Ledger. The complaint alleged that Dynamic Ledger failed to register its offering of Tezos, a digital token, in violation of the Securities Act of 1933. The Firm recovered $25 million for the class, one of the largest recoveries to date in a cryptocurrency-related securities class action.
Robbins Geller’s Crypto Task Force, a cross-disciplinary group of experts nationwide, continues its investigations into reckless marketing practices and misleading statements in the promotion of crypto investments and, where appropriate, to pursue litigation to seek recoveries for injured investors and consumers. This task force leverages experienced trial attorneys from the Firm’s Consumer Fraud and Securities Fraud practice groups as well as investigators, forensic accountants, damages specialists, and data analysts. More information about the Firm’s Crypto Task Force, its experts, and current investigations is available here.
ABOUT ROBBINS GELLER RUDMAN & DOWD LLP: Robbins Geller Rudman & Dowd LLP is one of the world’s leading complex class action firms representing plaintiffs in securities fraud cases. The Firm is ranked #1 on the most recent ISS Securities Class Action Services Top 50 Report for recovering more than $1.75 billion for investors in 2022 – the third year in a row Robbins Geller tops the list. And in those three years alone, Robbins Geller recovered nearly $5.3 billion for investors, more than double the amount recovered by any other plaintiffs’ firm. With 200 lawyers in 10 offices, Robbins Geller is one of the largest plaintiffs’ firms in the world and the Firm’s attorneys have obtained many of the largest securities class action recoveries in history, including the largest securities class action recovery ever – $7.2 billion – in In re Enron Corp. Sec. Litig.