On Friday, recession fears caused a sharp drop in U.S. equities, with Bitcoin and Ethereum falling by 10% and 20%, respectively. This was accompanied by significant losses in DeFi projects like Maker, Lido DAO, and Chainlink, which saw drops between 18% and 23%.
Jump Crypto’s transfer of millions in USDC, USDT, and Ethereum between its wallets and exchanges like Coinbase and Binance has added to market volatility. The firm is under investigation by the SEC and CFTC for its role in the TerraUSD collapse and other trading activities, intensifying regulatory scrutiny.
Top cryptocurrencies within the decentralized finance (DeFi) sector experienced a significant sell-off late Sunday, triggered by Jump Trading’s crypto arm moving millions of dollars to exchanges. This move came amidst economic and geopolitical concerns that prompted investors to exit the market.
Recession fears led to a sharp sell-off in U.S. equity markets on Friday, with the unemployment rate climbing to 4.3% in June, causing global market declines, including a 5.5% drop in Japan’s Nikkei 225. In response, Bitcoin and Ethereum fell by 10% and 20% respectively, as investors withdrew $780 million from long positions, shifting towards safer assets like bonds due to ongoing growth concerns.
Among the most affected were Maker, Lido DAO, UniSwap, Aave, and Chain-link, which saw declines between 18% and 23%, marking their worst single-day performance since April, according to CoinGecko data. The sell-off followed Jump Crypto’s actions on Sunday, where it moved tens of millions of dollars in USDC, USDT, and Ethereum between its cold wallets and various crypto exchanges, including Coinbase, Gate.io, and Binance, as shown by data from blockchain analysis firm Arkham Intelligence.
While it remains unclear whether Jump Crypto intends to liquidate some of its $243 million in crypto assets, the firm did not immediately respond to requests for comments. Jump Crypto, a subsidiary of Jump Trading, has significant ties to the DeFi sector, having been an active participant and liquidity provider on Serum, a decentralized exchange on the Solana blockchain. It also previously managed development on the cross-chain DeFi bridge Wormhole, until a major exploit in November of the previous year, which led Jump to cover a $320 million loss.
Jump Crypto is currently under legal scrutiny for its alleged involvement in the collapse of TerraUSD and the Terra ecosystem in May 2022. The U.S. Securities and Exchange Commission (SEC) is investigating the firm for purportedly manipulating the price of UST, resulting in approximately $1.3 billion in profits for Jump Crypto and its CEO, Kanav Kariya. These allegations are part of the SEC’s broader case against Terraform Labs and its founder, Do Kwon, accused of running a multi-billion dollar crypto asset securities scam.
Additionally, the Commodity Futures Trading Commission (CFTC) is investigating Jump Crypto’s trading and investment activities. While these investigations do not necessarily imply wrongdoing, they do increase the regulatory scrutiny on the Chicago-based firm.
