Fracture Labs, a developer known for its cryptocurrency-based games, has initiated legal proceedings against Jump Trading, alleging the firm orchestrated a “pump and dump” scheme involving its gaming token, DIO. The lawsuit, filed on October 15 in an Illinois District Court, claims that Fracture Labs entered into a partnership with Jump Trading in 2021 to act as a market maker for the initial launch of the DIO token on the crypto exchange HTX.
According to the allegations, Fracture Labs loaned Jump Trading 10 million DIO tokens, amounting to a value of $500,000, while also sending an additional 6 million tokens, valued at $300,000, to HTX. Following the token’s launch, HTX engaged online influencers to promote DIO, leading to a substantial surge in its price, which peaked at $0.98. At this point, the value of the borrowed tokens skyrocketed to approximately $9.8 million.
However, the situation took a turn when Jump Trading liquidated its holdings, resulting in a drastic price drop to $0.005. The lawsuit contends that this mass selling allowed Jump to reap substantial profits, eventually repurchasing the tokens at the reduced price of around $53,000, returning them to Fracture Labs, and subsequently terminating their agreement.
Fracture Labs argues that this fraudulent activity significantly devalued the DIO token, making it increasingly challenging to attract interest from potential investors. Additionally, the developer claims an aspect of their agreement included a 1.5 million USDT deposit to ensure they would not manipulate the DIO market during the initial trading period. However, the drastic price fluctuations prompted HTX to refuse the majority of the refund for this deposit, further complicating the situation for Fracture Labs.
The lawsuit accuses Jump Trading of multiple offenses, including fraud, civil conspiracy, breach of contract, and breach of fiduciary duty. Fracture Labs is seeking a jury trial along with damages and the return of profits gained through the alleged misconduct. Notably, HTX is not included as a defendant in the suit, and neither Jump Trading nor HTX has provided immediate comments regarding the allegations.
