The US Commodity Futures Trading Commission (CFTC) has initiated a probe into Jump Crypto for undisclosed reasons, Forbes reported on June 20, citing people familiar with the matter.
The federal agency is reportedly examining the firm’s trading and investment activities in the crypto sector, though this scrutiny does not imply any misconduct.
Sources told Forbes:
“The CFTC’s investigation into Jump’s crypto business reflects the latest probe by a federal agency.”
Neither the CFTC nor Jump Crypto responded to requests for comment on the ongoing investigation and have yet to make any public statements about it as of press time.
The investigation is part of a broader crackdown by US regulators on the crypto industry. The CFTC has been ramping up its enforcement actions, with one-third of its 2023 enforcement cases targeting crypto firms.
Jump’s challenges
Jump Crypto, which launched its crypto division in 2021, has been navigating a series of challenges, including its involvement in high-profile hacks and the collapse of major crypto projects. In response, the firm has scaled back its operations, spinning off various projects and withdrawing from the Bitcoin ETF race.
Led by Kanav Kariya, Jump Crypto has been a significant player in the DeFi space, notably investing in the interoperability protocol Wormhole. After the protocol suffered a $326 million exploit in February 2022, Jump covered the losses, reimbursing affected users in full.
Additionally, Jump was a principal market maker for the crypto exchange FTX, incurring nearly $300 million in losses when the exchange collapsed in November 2022.
The firm was also involved with Terra LUNA and submitted information about the project in confidentiality to the SEC in the watchdog’s case against Terraform Labs.
Despite these setbacks, Jump Crypto remains a notable entity in the industry. Until more information is released to the public, it is unclear whether the CFTC investigation will substantially impact the firm.
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