Fracture Labs is suing Jump Trading for a pump-and-dump scam. They allege that the dump of DIO led to massive investor losses and now want compensation.
Crypto is not short of controversies. There have been major hacks, and billions have been lost over the years. Binance, Bitstamp, and other top crypto exchanges have not been spared.
On the other hand, users must be constantly on the watch to avoid scams and phishing campaigns.
Unfortunately, even when trading, clients must be keen not to fall victim to manipulation. From what’s there, manipulation tactics like wash trading and pump-and-dump schemes are illegal.
Fracture Labs Suing Jump Trading For Pumping and Dumping DIO
Therefore, it is unsurprising that Fracture Labs, a blockchain game developer, is suing Jump Trading–a crypto market maker, for allegedly pumping and dumping its DIO gaming token.
In a file submitted to an Illinois District Court, the gaming developer claims that the market maker knowingly manipulated DIO prices by pumping and then dumping it on holders, raking in a hefty profit.
Additionally, Fracture Labs said Jump Trading used its position as a prominent market maker to influence DIO prices.
By allegedly working with online influencers to promote the token while concurrently acquiring large positions of DIO, they helped create a “false sense of demand.”
Due to their manipulation activities, DIO prices rose to as high as $0.98 on HTX, the centralized crypto exchange.
(DIOUSDT)
Interestingly, the ramp is not named in this lawsuit, but there are questions about whether they knew of Jump Trading’s pump-and-dump scheme.
The pump happened in late 2021 when crypto prices like Bitcoin had peaked at over $69,000.
The bad news for DIO holders is that this was their end. Jump Trading sold all their stash, forcing prices to crash, dipping to as low as $0.005.
As of mid-October 2024, DIO is still struggling for momentum and is changing hands at $0.013, still down over -85% from its all-time highs.
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Unsuspecting DIO Holders Suffered For Jump Trading’s Gain
Fracture Labs now insists that Jump Trading’s “pumping” DIO prices before exiting in a block sell led to massive losses for holders.
But to add insult to injury, the gaming developer said the market maker repurchased the token at a lower price and returned their stash before ending the agreement.
By doing so, they illegally reversed their initial investment but wreaked havoc on their community.
In the lawsuit, Fracture Labs now wants the market maker to be charged with fraud, deceit, and multiple breaches of contract. The game developer also wants to be compensated for damages.
DoJ Charges GotBit For Price Manipulation
The decision to sue is not the first in the industry. In fact, the DoJ and the United States SEC have pressed serious charges against other market makers.
Recently, GotBit, a meme coin market maker, was charged with other firms for alleged wash trading and pump-and-dump schemes.
In “Operation Token Mirrors“, the Feds had to create a meme coin, NexFundAI. The goal was to lure these scammers before building a solid case demonstrating GotBit’s involvement in wash trading and pump-and-dump.
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Disclaimer: Crypto is a high-risk asset class. This article is provided for informational purposes and does not constitute investment advice. You could lose all of your capital.
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