Jump Trading accused of $9.8M ‘pump and dump’ with DIO token

Fracture Labs, a crypto game developer, has filed a lawsuit against Jump Trading, accusing the firm of engaging in a "pump and dump" scheme involving its DIO (CRYPTO:DIO) gaming token. 

The suit, lodged on Oct. 15 in Illinois District Court, claims Jump Trading manipulated the DIO token price for profit, breaching an agreement and causing significant financial damage to Fracture Labs. 

According to the complaint, Fracture Labs had an agreement with Jump in 2021, where the latter acted as a market maker for the DIO token on the crypto exchange Huobi, now known as HTX. 

As part of the deal, Fracture Labs loaned 10 million DIO tokens (valued at $500,000) to Jump and sent an additional 6 million tokens ($300,000) to HTX. 

To promote DIO, HTX recruited online influencers, leading to a price surge that peaked at $0.98 per token, raising the value of Jump’s holdings to $9.8 million. 

The lawsuit alleges Jump sold off all its DIO holdings at this inflated price, triggering a massive sell-off that caused the token's value to plummet to $0.005. 

Jump then allegedly repurchased the tokens at this low price, worth approximately $53,000, returned them to Fracture Labs, and terminated the agreement. 

Fracture Labs claims this scheme resulted in severe devaluation of the DIO token, damaging its ability to attract investors. 

Further allegations in the suit involve a 1.5 million Tether (CRYPTO:USDT) deposit by Fracture Labs into an HTX account as a guarantee against market manipulation during the first 180 days of trading. 

Fracture Labs claims that due to Jump's actions, the DIO price fell outside of agreed parameters, leading HTX to withhold most of the USDT deposit. 

Fracture Labs accuses Jump Trading of fraud, breach of contract, and breach of fiduciary duty, seeking damages, disgorgement of profits, and a jury trial. 

While Jump Trading and HTX have yet to respond to these allegations, HTX has not been named as a defendant in the lawsuit.