Jump Crypto Subsidiary Tai Mo Shan to Pay $123 Million to Settle SEC Charges Over TerraUSD Manipulation

Bounce Crypto’s subsidiary, Tai Mo Shan, has agreed to pay a $123 million settlement with the U.S. Securities and Change Fee (SEC).

Bounce Crypto’s subsidiary, Tai Mo Shan, has agreed to pay a $123 million settlement with the U.S. Securities and Change Fee (SEC) over its involvement in stabilizing the TerraUSD (UST) stablecoin in 2021. The SEC accused Tai Mo Shan of deceptive traders by buying $20 million value of UST to keep up its greenback peg throughout a interval of instability. The settlement, introduced on Dec. 20, 2024, comes after an investigation into actions that the SEC claims created a misunderstanding of the coin’s stability.

In Might 2021, TerraUSD skilled a “depeg” occasion the place it misplaced its $1 worth, triggering fears about its stability. Tai Mo Shan, working as a part of Bounce Crypto, stepped in to purchase important quantities of UST, which appeared to stabilize the coin quickly. The SEC’s investigation discovered that this intervention misled traders, who had been led to consider that Terraform Labs’ algorithmic stabilization mechanism was functioning as supposed. The $123 million penalty consists of $86 million in disgorgement of earnings created from these trades and $36 million as a civil penalty.

UST’s collapse in Might 2022 precipitated widespread panic within the crypto market. A big sale of UST by a whale precipitated its value to fall from its $1 peg, and by Might 10, 2022, it was buying and selling at simply $0.67. This revealed that the underlying reserves in Luna had been inadequate to help UST, resulting in the stablecoin’s complete collapse and triggering investigations into Terraform Labs and its founder, Do Kwon.

The settlement with Tai Mo Shan is a part of the SEC’s ongoing efforts to manage the cryptocurrency market and implement transparency. It additionally displays the rising scrutiny of stablecoins, with new laws such because the Lummis-Gillibrand Stablecoin Act of 2024, which seeks to ban algorithmic stablecoins, as a direct consequence of UST’s failure.

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