Outside Source
Game developer Fracture Labs accused Jump Trading of using its DIO token to profit millions from a “pump and dump” scheme.
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Crypto game developer Fracture Labs has sued Jump Trading, accusing the firm of using its DIO gaming token to operate a “pump and dump” scheme.
In the Oct. 15 suit filed in an Illinois District Court, Fracture Labs alleged that in 2021, it entered an agreement with Jump as a market maker to assist with an initial offering of its DIO token on the crypto exchange Huobi, now HTX.
As part of the agreement, the game developer claimed it loaned 10 million DIO to Jump, worth $500,000, separately sending 6 million tokens, worth $300,000, to HTX.
HTX solicited online influencers to promote the DIO token after its launch. The price then spiked to a high of $0.98, and the borrowed tokens were worth $9.8 million, according to the complaint.
Jump then sold all holdings, with the “mass liquidation” driving the price down to $0.005, and the trading firm profiting millions, Fracture Labs claimed.
The company alleged Jump then rebought the tokens at the lower price — worth about $53,000 — returned them to Fracture Labs and then ended the agreement.
“The result of Defendant Jump’s fraudulent scheme is that DIO was dramatically devalued, making it harder for FractureLabs to attract investors and interest,” the suit claimed.
Fracture Labs claims Jump Trading violated an agreement by using its token as part of a “pump and dump” scheme. Source: PACER
Fracture Labs claimed another part of the agreement saw it transfer 1.5 million in Tether (USDT) into an HTX holding account as a guarantee the game developer wouldn’t manipulate “the market for the DIO token during the first 180 days of trading.”
Jump allegedly promised to keep DIO’s price within certain parameters required by HTX as part of its agreement to list the token on its exchange.
However, due to the price swing, Fracture Labs claims HTX refused to “refund the majority of FractureLabs’s 1.5 million USDT deposit.”
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“Jump’s dump of the DIO tokens caused the price to swing outside of the parameters that Jump had recommended for the token and that FractureLabs had agreed to in its listing agreement with HTX,” Fracture Labs claimed.
Fracture Labs accused Jump Trading of fraud and deceit, civil conspiracy to commit fraud, breach of contract and breach of fiduciary duty. It’s requesting a jury trial, damages and disgorgement of profits.
HTX wasn’t named as a defendant in the lawsuit. Jump Trading and HTX did not immediately respond to a request for comment.
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This article first appeared at Cointelegraph.com News
