Crypto News – Fracture Labs Seeks Damages in Lawsuit Against Jump Trading
Crypto News – Crypto game developer Fracture Labs has filed a lawsuit against Jump Trading, accusing the trading firm of orchestrating a “pump and dump” scheme involving its DIO gaming token. The suit, filed on October 15 in an Illinois District Court, claims that Jump Trading misused the DIO token to manipulate its market value.
Details of the Agreement
According to the complaint, Fracture Labs entered into a market-making agreement with Jump Trading in 2021 to assist in the initial offering of its DIO token on the cryptocurrency exchange Huobi, now known as HTX. As part of this arrangement, Fracture Labs alleges it loaned 10 million DIO tokens to Jump, valued at $500,000, and sent an additional 6 million tokens worth $300,000 to HTX.
Allegations of Market Manipulation
After the token launch, HTX reportedly enlisted online influencers to promote DIO. Following this promotion, the token price surged to a high of $0.98, leading to a valuation of the borrowed tokens at $9.8 million. However, Fracture Labs claims that Jump Trading sold all their holdings, which resulted in a “mass liquidation” that plummeted the price to $0.005, allowing Jump to profit significantly.
Fracture Labs alleges that Jump then repurchased the tokens at this lower price—approximately $53,000—returned them to the developer, and subsequently terminated the agreement.
Impact on Fracture Labs
The lawsuit states, “The result of Defendant Jump’s fraudulent scheme is that DIO was dramatically devalued, making it harder for Fracture Labs to attract investors and interest.” Additionally, Fracture Labs claims it transferred 1.5 million in Tether (USDT) into an HTX holding account as a guarantee that it would not manipulate the market for DIO during the initial 180 days of trading.
Jump allegedly promised to maintain DIO’s price within specific parameters necessary for its listing on HTX. However, due to the drastic price changes caused by Jump’s actions, Fracture Labs claims HTX refused to refund the majority of its 1.5 million USDT deposit.
Legal Claims and Requests
Fracture Labs has accused Jump Trading of fraud and deceit, civil conspiracy to commit fraud, breach of contract, and breach of fiduciary duty. The company is seeking a jury trial, damages, and the disgorgement of profits. Notably, HTX is not named as a defendant in the lawsuit.
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