Tai Mo Shan, a subsidiary of Jump Crypto, has agreed to a $123 million settlement with the US Securities and Exchange Commission (SEC) for allegedly misleading investors about the stability of TerraUSD (UST), an algorithmic stablecoin that eventually failed.
The settlement, announced on December 20, underscores the SEC’s continued scrutiny of stablecoins and their operators. According to the SEC, Tai Mo Shan made a deal in 2021 with Terraform Labs to buy Terra LUNA at a discounted price.
Additionally, the company reportedly spent $20 million to maintain UST’s 1:1 peg to the US dollar. The collapse of UST in May 2022 had a ripple effect throughout the crypto markets and resulted in significant losses for many investors.
In response, SEC Chair Gary Gensler stated that regardless of how these assets are labeled, all crypto market participants must comply with securities laws and be transparent with the public. UST, formerly the third-largest stablecoin by market capitalization, caused widespread panic within the cryptocurrency industry when it collapsed.
