In a striking legal battle, an independent game developer has accused a prominent trading firm of orchestrating a fraudulent scheme that resulted in significant financial losses. On October 15, 2024, FractureLabs OU filed a complaint in the United States District Court for the Northern District of Illinois against Jump Trading, LLC. The lawsuit alleges fraud and deceit, civil conspiracy, breach of contract, and breach of fiduciary duty related to the initial exchange offering (IEO) of FractureLabs' cryptocurrency token, DIO.
FractureLabs is an Estonian-based game developer known for its online role-playing game Decimated, which integrates blockchain technology and its own cryptocurrency token, DIO. In late 2021, FractureLabs planned an IEO to raise capital for Decimated's development. Jump Trading offered to facilitate this process by providing consultation services and acting as a market maker for the DIO token. However, according to the complaint, Jump Trading allegedly concealed its true intent to execute a "pump-and-dump" scheme—a fraudulent practice where an asset's price is artificially inflated before being sold off at a profit.
The complaint details how Jump Trading persuaded FractureLabs to lend them 10 million DIO tokens under the guise of market-making activities. Additionally, FractureLabs was advised to send 6 million DIO tokens to Huobi Exchange (now HTX) for sale during their IEO event called Huobi Primelist. As part of this agreement and on Jump's advice, FractureLabs deposited 1.5 million USDT with HTX as security against price fluctuations in DIO's value within the first 180 days post-offering.
Once these agreements were secured, Jump Trading allegedly manipulated the market by selling off large quantities of borrowed DIO tokens at peak prices—up to $0.98 per token—before repurchasing them at significantly lower prices after causing their value to plummet dramatically. This sell-off reportedly led HTX to withhold most of FractureLabs' USDT deposit due to alleged violations of pricing parameters set forth in their agreement.
FractureLabs claims that this scheme not only devalued their cryptocurrency but also hindered their ability to attract investors while allowing Jump Trading and HTX substantial profits at their expense. They are seeking compensatory damages alongside punitive damages from both parties involved in what they describe as malicious acts designed solely for self-enrichment through deception.
Representing FractureLabs are attorneys Deanna Lee Oswald and Benjamin H. Brodsky from Brodsky Fotiu-Wojtowicz PLLC based out of Miami Florida; however no judge has been assigned yet nor specific case ID provided beyond reference number "24-cv-10249".