An independent game developer has accused a prominent trading firm of orchestrating a fraudulent scheme to manipulate the market for its cryptocurrency token. 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 case revolves around allegations of fraud, deceit, civil conspiracy, breach of contract, and breach of fiduciary duty. FractureLabs, an Estonian company known for its pioneering work in the crypto-gaming industry with its flagship game "Decimated," claims that Jump Trading exploited their initial exchange offering (IEO) of DIO tokens to execute a "pump-and-dump" scheme. According to the complaint, Jump Trading misrepresented its intentions to act as a market maker and consultant for FractureLabs during their IEO on Huobi Primelist in late 2021. Instead, they allegedly manipulated the market by inflating the price of DIO tokens before selling off their holdings at a profit, causing the token's value to plummet.
FractureLabs alleges that Jump Trading's fraudulent actions began when they persuaded FractureLabs to enter into agreements that would allow Jump to borrow millions of DIO tokens under false pretenses. These agreements included lending 10 million DIO tokens worth $500,000 and sending another 6 million DIO tokens worth $300,000 to Huobi (now HTX) for sale during the IEO. Furthermore, FractureLabs was advised by Jump Trading to deposit 1.5 million USDT with HTX as security against price fluctuations—funds which were later withheld by HTX after claiming pricing parameters were violated due to Jump's alleged manipulation.
Jump Trading is accused of breaching its fiduciary duty by failing to act in good faith as a market maker and advisor while exploiting their position for personal gain. The complaint highlights how Jump's actions not only devalued FractureLabs' holdings but also hindered their ability to attract investors and capitalize on higher trading prices for DIO tokens. As part of their relief sought from the court, FractureLabs demands compensatory damages, punitive damages, disgorgement of profits obtained through wrongful acts, and other appropriate reliefs.
Representing FractureLabs are attorneys Deanna Lee Oswald and Benjamin H. Brodsky from Brodsky Fotiu-Wojtowicz PLLC based in Miami, Florida. The case is presided over by judges at the United States District Court for the Northern District of Illinois under Case ID: 1:24-cv-10249.