The Commodity Futures Trading Commission (CFTC) has launched an investigation into the Chicago-based trading firm Jump’s participation in the crypto market, focusing on its trading and investment activities, according to an undisclosed source familiar with the matter, as reported by Fortune Magazine.

Hacks And Collapses Haunt Jump Trading

The investigation comes after a tumultuous period for Jump, which has been recognized for its expertise in algorithmic trading. However, the company faced setbacks, including being linked to a series of hacks and collapses. 

The company suffered a major blow with the $325 million hack of Wormhole, a decentralized finance (DeFi) platform designed to bridge separate blockchains. 

Moreover, following the collapse of FTX in November 2022, it was revealed that Jump had suffered nearly $300 million in losses as a top market maker on the failed crypto exchange. 

Further controversy arose when the US Securities and Exchange Commission (SEC) filed a lawsuit against Terraform Labs and its founder Do Kwon in February 2023, related to the failed TerraUSD stablecoin. 

The SEC’s case concluded with a jury ruling in favor of the agency in April, following testimony from a former Jump employee who acted as a whistleblower.

Crypto Crackdown Widens

In March 2023, the DOJ filed a criminal case against Do Kwon, mentioning Jump as a “US-based proprietary trading firm” that played a role in maintaining Terra’s peg. However, similar to the SEC lawsuit, no allegations of wrongdoing or charges were directed at Jump. 

Subsequently, Jump scaled back its involvement in the crypto sector, spinning off two high-profile projects and opting out of the race for a spot in the Bitcoin ETF market.

The CFTC’s investigation into Jump’s crypto business is the latest inquiry by a federal agency in the US. While it remains unclear whether the agency is considering charges against the company, it is important to note that many of Jump’s activities, including crypto products, fall under the jurisdiction of the CFTC. 

As Bitcoinist reported, CFTC Chair Rostin Behnam,  indicated that cryptocurrency firms can anticipate a new cycle of enforcement actions.

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