With a troubled past, Jump's full recovery of its encryption business has fallen into an awkward situation
Although Jump still has the strength to make a comeback, the crypto market may find it hard to trust it again.Author: Nianqing, ChainCatcher
In August last year, a hasty and massive sell-off by Jump Trading pushed the crypto market into a deep abyss, further triggering the "805 crash." At that time, rumors about "this big guy" Jump collapsing grew rampant.
In the six months that followed, the few news reports about Jump were almost entirely centered around its internal and external lawsuits.
Recently, CoinDesk cited sources familiar with the matter, stating that Jump is currently fully restoring its cryptocurrency business. The Jump Trading official website shows that Jump is recruiting a batch of cryptocurrency engineers for its offices in Chicago, Sydney, Singapore, and London. Additionally, another insider added that Jump plans to begin replenishing its U.S. policy and government liaison positions at the appropriate time.
Jump was once referred to as the "absolute king" of the trading world. With ultra-low latency trading systems and complex algorithm designs, Jump became one of the key liquidity providers in traditional finance. As the scale of the crypto market continued to expand, Jump began to market-make for cryptocurrencies and invest in crypto projects, officially establishing its crypto business division, Jump Crypto, in 2021.
However, the gamble that accompanied the birth of Jump Crypto also laid the groundwork for its later tragedy.
The Rise and Fall of Jump Trading: The Secretive Giant's Crypto Gamble
In the early days, traders publicly shouted prices in the trading hall through calls, gestures, and jumps to open outcry. This was also the inspiration for the name Jump Trading.
Jump Trading is headquartered in Chicago and was founded in 1999 by two former Chicago Mercantile Exchange (CME) floor traders, Bill DiSomma and Paul Gurinas. Jump quickly grew to become one of the largest high-frequency trading firms in the world, active in futures, options, and securities exchanges globally, and is also a major trader of U.S. Treasury bonds and cryptocurrencies.
Due to the need to protect trading strategies, Jump has always maintained a low profile. Coupled with the fact that market makers have always operated behind the scenes, a layer of mystery has always surrounded it. Jump rarely discloses its financial data, and the founders have kept tight-lipped about its operational status. Since 2020, perhaps to reduce exposure, Jump adjusted its strategy and business restructuring, no longer needing to submit 13F filings to the SEC, instead continuing to submit them through its parent company, Jump Financial LLC. According to the latest 13F filing submitted by the latter, Jump Financial's assets under management exceed $7.6 billion, with approximately 1,600 employees. Additionally, Jump Trading has offices in the U.S., Europe, Australia, and Asia.
Jump Trading also has two subsidiary business units: Jump Capital and Jump Crypto.
Jump Capital
Jump Capital, headquartered in Chicago and established in 2012, has been involved in crypto investments for many years, even though Jump's crypto division was only officially established in 2021. One of its partners and heads of crypto strategy, Peter Johnson, revealed that the company has been secretly deploying crypto strategies for years.
According to relevant RootData pages, Jump Capital has a crypto portfolio exceeding 80 investments, primarily in DeFi, infrastructure, and CeFi, having invested in projects like loTeX, Sei, Galxe, Mantle, and Phantom.
In July 2021, Jump launched its largest fund since its inception, with a total capital commitment of $350 million, attracting 167 investors, marking Jump Capital's seventh venture fund.
Jump Crypto
In 2021, while completing fundraising for its seventh investment fund, Jump announced the formation of its crypto investment division, Jump Crypto, allocating 40% of the seventh fund to the cryptocurrency sector, focusing on DeFi, financial applications, blockchain infrastructure, and stocks and tokens in Web 3.0.
The then 26-year-old Kanav Kariya became the first president of Jump Crypto in 2021. Kariya joined Jump Trading as an intern in early 2017 and was assigned to build the early cryptocurrency trading infrastructure.
Related Reading: 《Digging into Jump's Past: Intern to President in 4 Months》
In May 2021, Terra's algorithmic stablecoin UST first experienced a de-pegging. In the following week, Jump secretly purchased a large amount of UST to create an illusion of demand and pull UST's value back to $1. This trade earned Jump $1 billion, and its proposal's author, Kariya, was rapidly promoted to president of Jump Crypto four months later.
However, this secret transaction also laid the groundwork for Jump's fall from grace.
With the complete collapse of the Terra UST stablecoin in 2022, Jump faced criminal charges for allegedly manipulating the UST price in collaboration with Terra. In the same year, Jump suffered heavy losses due to its deep ties with FTX and the Solana ecosystem when FTX went bankrupt.
After the FTX incident, the U.S. tightened regulations on the crypto market, and reports emerged that Jump Trading was being forced to scale back its operations and gradually exit the U.S. crypto market. For example, Robinhood ceased its partnership with Jump after the FTX incident. Jump Crypto's subsidiary, Tai Mo Shan, was once one of Robinhood's largest market makers, responsible for handling billions of dollars in daily trading volume. However, since the fourth quarter of 2022, Robinhood's financial reports no longer mentioned Tai Mo Shan, and Robinhood shifted to collaborating with market makers like B2C2.
Additionally, to reduce its cryptocurrency business, in November 2023, Jump Crypto officially spun off Wormhole, with Wormhole's CEO and COO leaving Jump Crypto. The Jump Crypto team also saw its numbers nearly halved during this period.
Jump Crypto's investment activity significantly decreased after 2023. According to relevant RootData pages, Jump Crypto has a crypto portfolio exceeding 90 investments, primarily in infrastructure and DeFi, having invested in projects like Aptos, Sui, Celestia, Injective, NEAR, and Kucoin. However, its "participation rounds in the past year" number only in single digits.
On June 20, 2024, Fortune reported that the U.S. Commodity Futures Trading Commission (CFTC) is investigating Jump Crypto. A few days later, Kanav Kariya, who had worked at Jump Trading for six years, announced his resignation.
A month later, Jump Crypto began a massive ETH sell-off. Within ten days, the total value of ETH sold by Jump Crypto exceeded $300 million, and panic directly led to the market drop on August 5, 2024, with Ethereum experiencing a maximum single-day drop of over 25%. The community speculated that Jump Crypto's sell-off of ETH might have been under pressure from the CFTC investigation, exchanging for stablecoins to exit the cryptocurrency business at any time. Jump Crypto was once rumored to be "this big guy is going down."
Related Reading: 《Accused of Crashing the Market, Uncovering Crypto Market Maker Jump Crypto》
In December 2024, Jump Crypto's subsidiary Tai Mo Shan agreed to pay approximately $123 million to settle with the U.S. SEC. According to subsequent SEC charge documents, Tai Mo Shan was involved in market-making for Terra's UST that year. It is reported that Tai Mo Shan is registered in the Cayman Islands, established to handle specific market-making and cryptocurrency trading businesses.
The events between Jump and Terra seem to have finally settled after more than three years of painful entanglement.
Jump Fully Restores Crypto Business: A King’s Return or an Unrecoverable Burden?
Why did Jump choose to fully restore its crypto business at this time?
In addition to the judicial resolution of Jump's involvement in the Terra incident, a more critical reason is the Trump administration's friendly attitude towards cryptocurrencies.
Just a few days ago, on March 5, Jump's old rival DRW's crypto division, Cumberland DRW, signed a joint application with the U.S. Securities and Exchange Commission (SEC) to withdraw the SEC's lawsuit against it. This agreement was reached in principle on February 20 and is currently awaiting SEC committee approval. The SEC sued Cumberland DRW last October, accusing it of operating as an unregistered securities dealer and selling over $2 billion in unregistered securities.
The new leadership at the SEC has adopted a more lenient approach towards crypto companies, which has given Jump hope for a comeback. Additionally, the possibility of spot ETFs for altcoins like Solana being approved this year has made Jump Crypto, deeply involved in the Solana ecosystem, eager to get a piece of the action.
At the end of 2023, Jump had negotiations with BlackRock regarding "market-making for Bitcoin spot ETFs," but perhaps due to regulatory issues, Jump Crypto ultimately did not participate in the market-making for Bitcoin or the later Ethereum spot ETFs.
Jump Still Has the Strength to Make a Comeback
A skinny camel is still bigger than a horse. Jump Trading still holds approximately $677 million in on-chain assets, with Solana tokens accounting for nearly half at 47%, holding 2.175 million SOL. Stablecoins account for about 30%.
Source: ARKHAM
Jump Trading's on-chain asset holdings remain among the largest among crypto market makers. As of March 8, 2025, the comparison of holdings between Jump and other market makers, ranked from high to low, is as follows:
- Jump Trading: $677 million
- Wintermute: $594 million
- QCP Capital: $128 million
- GSR Markets: $96 million
- B2C2 Group: $82 million
- Cumberland DRW: $65 million
- Amber Group: $20 million
- DWF Labs: $10 million
In addition to the capital volume, Jump also possesses a series of technical advantages. For example, in its deep involvement in the Solana ecosystem, Jump currently participates in various forms such as technical development (developing the Firedancer verification client, providing technical support for Pyth Network and Wormhole), investments (Jump has invested in several Solana ecosystem projects), and market-making. The samples Jump provides for the construction of the Solana ecosystem may bring it more collaboration opportunities.
However, from another perspective, Jump's dominance has weakened Solana's decentralization.
Burdened by a Dark History, Jump Fears an Unrecoverable Burden
Jump has a halo, but it also has a fair share of dark history.
The UST incident of Terra clearly shows Jump Crypto's market-making style in the crypto market is extremely aggressive. Although market makers' apparent income comes from trading spreads, colluding with project parties to pump prices in exchange for options and other substantial income is not uncommon in the crypto industry.
In the traditional financial industry, market-making is a strictly regulated business, with regulators ensuring that there are no conflicts of interest. Market makers do not directly collaborate with companies issuing stocks but work with exchanges under the supervision of regulatory agencies. Market-making and venture capital, among other different businesses, are usually physically separated to avoid any possibility of insider trading or market manipulation.
Some researchers have accused Jump of collaborating with Alameda to inflate Serum's fully diluted valuation to exploit investors, but this matter quickly faded away. Additionally, in October last year, video game developer FractureLabs filed a lawsuit against Jump Trading in the U.S. District Court in Chicago, accusing it of fraud and deception by manipulating the price of the DIO token. FractureLabs originally planned to raise funds by issuing the DIO token on Huobi (now renamed HTX) in 2021. The company hired Jump Trading as the market maker for DIO and lent it 10 million tokens while sending 6 million to HTX for sale. However, Jump Trading systematically liquidated its DIO holdings, causing the token price to plummet to about $0.005 and pocketing millions of dollars in profits. Subsequently, Jump repurchased about $53,000 worth of tokens at a steep discount and returned them to FractureLabs, then terminated the market-making agreement. Currently, this lawsuit has not seen any further developments.
Although Jump Crypto and departments like Jump Trading appear independent on the surface, there are significant conflicts of interest in their actual operations. The inability to distinguish between market-making venture capital and trading business is directly related to the lack of clear regulation in the crypto industry. To some extent, this is not a specific market maker's style but a common style among market makers in the industry, such as the former Alameda and today's DWF. In traditional finance, market-making is strictly regulated, and market makers do not directly collaborate with companies issuing stocks but work with exchanges under the supervision of regulatory agencies. To avoid insider trading or market manipulation, market-making and venture capital, among other different businesses, are usually physically separated.
Yesterday, the market-making style and ethical standards of market makers were once again discussed after a GPS token market maker added unilateral liquidity on the exchange, causing the token price to plummet. @Mirror Tang believes that market makers and project parties together form a shadow banking system. Project parties often provide funds to market makers through unsecured loan credit lines, and market makers use this capital to leverage their market-making, thereby enhancing market liquidity. In a bull market, this system can create huge profits, while in a bear market, it can easily trigger liquidity crises.
It remains uncertain whether Jump will resume its cryptocurrency market-making business. However, if the crypto community still remembers, it may need to remain vigilant about Jump's new market-making projects.
