The Rise and Fall of Jump Trading: The Secretive Giant's Crypto Gamble

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."

Author: Nianqing, ChainCatcher

Last August, a hasty and massive sell-off by Jump Trading drove the crypto market into a deep abyss, further triggering the "805 crash." At that time, rumors about "this big guy" Jump collapsing became widespread.

In the six months that followed, the few news reports about Jump were almost entirely focused on its internal and external lawsuits.

Recently, CoinDesk cited sources familiar with the matter, stating that Jump is now 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.

Another insider added that Jump plans to begin replenishing its U.S. policy and government liaison positions at the appropriate time.

Jump was once described as the "absolute king" of the trading world. With ultra-low latency trading systems and advanced algorithms, Jump became a key liquidity provider in traditional finance. As the scale of the crypto market expanded, Jump began to market-make for cryptocurrencies and invest in crypto projects, officially establishing its crypto business division, Jump Crypto, in 2021.

But the gamble that accompanied the birth of Jump Crypto also laid the groundwork for its later tragedy.

The Rise and Fall of Jump Trading: A Secretive Giant's Crypto Gamble

In the early days, traders used to shout prices in the trading hall through calls, gestures, and jumps to perform open outcry. This was also the inspiration for the name Jump Trading.

Headquartered in Chicago and founded in 1999 by two former Chicago Mercantile Exchange (CME) floor traders, Bill DiSomma and Paul Gurinas, Jump Trading quickly grew to become one of the largest high-frequency trading firms in the U.S., active in futures, options, and equities exchanges worldwide. It is also a major trader of U.S. Treasury bonds and cryptocurrencies.

Due to the need to protect its trading strategies, Jump has always maintained a low profile. Combined with the fact that market makers operate behind the scenes, a layer of mystery has shrouded it. Jump rarely discloses its financial data, and the founders keep mum about its operational status. Since 2020, perhaps to lower exposure, they adjusted their strategy and business structure, no longer needing to submit 13F filings to the SEC but continuing to do so through its parent company, Jump Financial LLC. According to the latest 13F filing submitted by the latter, as of the second quarter of 2024, Jump Financial's assets under management exceed $7.6 billion, and it has 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

Headquartered in Chicago and established in 2012, Jump Capital 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, mentioned that they have been deploying crypto strategies for a long time.

According to relevant RootData pages, Jump Capital has a crypto portfolio of over 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, and it attracted 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. He 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 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 stable