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Jump Crypto President Resigns Amid CFTC Investigation

Last Updated June 25, 2024 2:23 PM
Teuta Franjkovic
Last Updated June 25, 2024 2:23 PM

Key Takeaways

  • Jump Crypto President Kariya resigned amidst a CFTC investigation into the firm’s trading and investment practices.
  • The company has faced recent challenges, including a significant hack and losses from FTX’s collapse.
  • Despite these issues, Jump Crypto remains active in the crypto industry and engaged in political advocacy.

Four days after reports emerged that the Commodity Futures Trading Commission (CFTC) was investigating the activities of its subsidiary Jump Trading, Kanav Kariya, the President of Jump Crypto, announced  his resignation.

CCN reported last week that the CFTC has initiated an investigation into Jump Crypto. The inquiry focused on the firm’s trading and investment practices within the cryptocurrency market. However, the existence of this investigation didn’t suggest any misconduct on the part of Jump Crypto.

Jump Crypto President Departs Amid CFTC Investigation

Sources familiar with the matter indicated  that the CFTC had been investigating Jump Crypto for its activities in the cryptocurrency market. This investigation came after a series of eventful years for Jump, marked by notable incidents and significant financial challenges.

Kariya stated :

“Today marks the end of an incredible personal journey for me. It’s my last day at Jump, a moment I’m receiving with both a heavy heart and great excitement about the road ahead[…] I’m confident that Jump Crypto will continue to do great work in the industry.”

Jump Crypto has been involved in significant initiatives like Wormhole, Pyth, and Firedancer, but it has also encountered a series of setbacks. These include a $325 million hack of Wormhole, heavy financial losses due to the collapse of FTX in 2022, and accusations of attempting to stabilize Terra’s value during its near-collapse in 2021.

CFTC Investigation Despite Active Political Engagement

In an effort to shape the regulatory framework, Jump Crypto has actively engaged in political advocacy, donating $10 million to Fairshake, a political action committee that supports pro-crypto candidates, bringing its total contributions to $15 million.

While the CFTC’s investigation into Jump Crypto is a critical development, it does not imply any misconduct. Such investigations are standard as regulatory bodies work to better understand and regulate the rapidly changing digital asset sector. Nonetheless, the resignation of Kanav Kariya has heightened concerns  within the community about the nature of the investigation.

Upon announcing his resignation, Kariya expressed appreciation for his time and relationships at Jump Crypto and mentioned plans to remain involved with its portfolio companies. He noted he would take some time off to “read” and reflect on his next steps, suggesting a break before pursuing any new projects.

Jump Crypto Faces Increased Scrutiny Following High-Profile Incidents

Jump’s expansive operations had its problems, including an aforementioned $325 million hack of Wormhole, a decentralized finance platform that functions as a bridge across different blockchains. The late 2022 collapse of FTX brought more challenges, as detailed in Michael Lewis’s book “Going Infinite.” The book revealed that Jump had been a major market maker on the exchange, suffering losses close to $300 million.

The controversy didn’t stop there for Jump. During the SEC’s February 2023 lawsuit against Terraform Labs and its founder, Do Kwon, concerning the collapse of the TerraUSD stablecoin, the SEC alleged that a US trading firm, later identified as Jump, had discreetly supported Terra’s peg in a near-collapse in 2021. While Terraform and Kwon faced accusations of fraud for purportedly misleading the public about the peg’s stability, Jump was not charged. In a trial that spring, which included testimony from a former Jump employee turned whistleblower, the jury found in favor of the SEC.

In March 2023, the Justice Department began a criminal case against Kwon, which also mentioned Jump as a “US-based proprietary trading firm” that had a role in maintaining Terra’s peg. However, this reference did not imply any wrongdoing by Jump, nor were any charges brought against the firm.

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