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Kriptoteka > Crypto News > FractureLabs Sues Jump Trading for Crypto Price Manipulation
Crypto News

FractureLabs Sues Jump Trading for Crypto Price Manipulation

marcel.mihalic@gmail.com
Last updated: October 16, 2024 11:16 pm
By marcel.mihalic@gmail.com 3 Min Read
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On Wednesday, FractureLabs, a video game development company, initiated legal proceedings against Jump Trading, a crypto market maker. According to a report by Bloomberg, the lawsuit accuses Jump of engaging in “fraud and deceit” related to the manipulation of the DIO token price, which plays a crucial role in FractureLabs’ online game Decimated.

Fluctuations in DIO Token Value

The complaint reveals that in 2021, FractureLabs aimed to fundraise through an initial offering of the DIO token on the Huobi exchange, which is now known as HTX. As part of this initiative, FractureLabs enlisted Jump Trading to act as the market maker for the DIO token.

The agreement entailed the loan of 10 million DIO tokens to a subsidiary of Jump, along with a separate transaction where FractureLabs provided 6 million DIO tokens to Huobi for sale during the offering.

As the initial offering progressed, Huobi reportedly engaged online influencers to advocate for the DIO token, resulting in its price skyrocketing to $0.98 at its peak. This increase significantly enhanced the value of the tokens borrowed by Jump, bringing their worth to $9.8 million.

However, according to the lawsuit, the situation changed drastically when Jump purportedly began to “systematically” liquidate its DIO token holdings.

This selling activity precipitated a sharp decrease in the token’s price, which fell to approximately $0.005, allowing Jump to buy back the tokens at a fraction of their previous value—around $53,000—before returning them to FractureLabs and ending their market-making agreement.

Allegations of ‘Pump And Dump’ Scheme Against Jump Trading

FractureLabs’ lawsuit further claims that Jump Trading hid its intent to leverage the initial public offering of DIO for a “pump and dump” scheme, allegedly in collusion with the HTX exchange.

Jump is said to have guaranteed FractureLabs that it would keep the DIO token price within specific parameters required by Huobi for its listing.

Nonetheless, the video game developer asserts that the actions of Jump Trading led the token’s price to fall outside these agreed-upon parameters, which resulted in HTX refusing to refund a significant portion of a $1.5 million deposit made by FractureLabs in Tether’s USDT stablecoin.

In response to queries, HTX stated, “As this matter is now subject to ongoing litigation, and HTX is not named as a defendant, we are unable to comment further at this time.”

Jump Trading
The weekly chart depicts DIO’s price collapse in February 2022 and the subsequent sideways price movement. Source: DIOUSDT on TradingView.com

At the time of this writing, the DIO token was trading at $0.014, marking a 171% increase in value year-to-date.

Featured image from DALL-E, chart from TradingView.com

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