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Jump Crypto has fallen from grace. Despite its best efforts to distance itself from Sam Bankman-Fried following the spectacular collapse of FTX, Jump had unfortunate ties to his fraudulent empire that the CFTC might now be investigating.
As Michael Lewis documented in his book Going Infinite, Jump was one the largest market-makers on FTX and lost at least $300 million during its collapse. The firm, along with FTX Founder Sam Bankman-Fried, supported Solana and in the most expensive private bail-out in crypto history, funded Solana‘s then-largest interblockchain asset bridge, Wormhole.
Fortune reported on June 20 that the US Commodity Futures Trading Commission (CFTC) is investigating Jump, but didn’t provide details about the nature of its inquiries. On June 24, Bloomberg reported that Jump president Kanav Kariya stepped down.
The CFTC hasn’t sued Jump nor commented on its investigation and it’s important to remember that the existence of an investigation isn’t an indication of guilt or wrongdoing.
However, FTX’s support of Jump — and the CFTC’s investigation — is only a small part of the trading giant’s backstory. Indeed, Jump has many questionable backers.
Shady supporters of crypto‘s quant trading giant
For example, a vocal supporter of Jump was Do Kwon, the founder of Terra Luna which was once worth $29 billion but is now worthless. Kwon fawned over Jump’s president, Kanav Kariya, calling him a ‘bro‘ and ‘wunderkind.’
Kariya even served as a member of the Terra Luna Foundation Guard’s governing council.
Later, the Securities and Exchange Commission (SEC) explained how Kwon defrauded investors, and a jury agreed that he committed civil fraud. Kwon must pay more than $200 million as a result, and Terraform must pay $4.3 billion — likely more than it possesses.
Worse, the world learned during that SEC lawsuit that Jump was intimately involved in the operations of Terra (UST), Kwon‘s so-called algorithmic stablecoin. Far from algorithmic in actual practice, Jump manually traded and pumped money in to support Terra‘s price on several occasions.
Read more: How Jump helped US Robinhood users trade offshore at FTX
Su Zhu was also a Jump supporter and praised it for being diamond-handed and pro-crypto with a track record of ‘minimal balance sheet aggression’ and trading domination.
Authorities sent Zhu to prison in Singapore late last year and his fund, Three Arrows Capital, has since become a poster child of failed crypto hedge funds.
Jump also finds support among Asymmetric investors. Solana co-founders, Anatoly Yakovenko and Raj Gokal are limited partners in Asymmetric, Joe McCann’s $1 billion crypto hedge fund. McCann praises Jump’s efforts as bullish investment considerations for Solana, which he holds in Asymmetric.
For example, he praised Jump’s custom hardware and code build for Solana’s second-biggest validator software client.
Other limited partners in Asymmetric read like a leaderboard of embarrassing crypto fund managers: FTX itself, Tiger Global founder Scott Schleifer, and Multicoin Capital’s Kyle Samani and Tushar Jain.
- FTX is the most spectacular exchange collapse in crypto history. Its executives stole customer deposits and recklessly used those funds to trade on tiny altcoins like MobileCoin and FTT. Via plea or conviction, four FTX executives are guilty of 21 combined criminal counts.
- Tiger Global is most famous for losing 56% of its multi-billion dollar fund within one year. Needless to say, multi-billion dollar funds managing retirements, pensions, and endowments aren’t supposed to do that. Schleifer was in charge of Tiger’s VC fund which lost over $30 billion in 12 months.
- Multicoin Capital is also famous for one thing: helping VCs dump cheap Solana tokens onto retail bagholders.
Read more: Did Jump Crypto cause Solana stablecoin volume to collapse?
Multicoin was also the fund through which All-In Podcast members like David Sacks were able to sell rights to Solana (SOL) allocations during its pre-FTX bubble in 2021. When Sacks laughed on-air about selling millions of dollars worth of Solana exposure alongside fellow VC Chamath Palihapitiya, their privileged laughter became a global meme for how billionaires dump crypto bags on retail believers.
At the time, everyone knew SOL was a ‘Sam coin,’ a darling of Bankman-Fried who would later earn a 25-year prison sentence for his crimes.
VCs like Sacks and Palihapitiya had acquired SOL exposure via Multicoin for under $0.25 apiece. They laughed about selling at prices before their show aired on October 8, 2021, when SOL was trading above $155.
Sacks invested in Multicoin Capital’s first fundraise. He and his funds at Kraft allegedly made a $1 billion profit thanks to Multicoin’s early allocation of SOL.