On Wednesday, FractureLabs, a video game developer, initiated legal action against Jump Trading, a cryptocurrency market maker. The lawsuit, highlighted by Bloomberg, claims that Jump engaged in “fraud and deceit” by manipulating the value of the DIO token, which plays a crucial role in FractureLabs’ game, Decimated.
Fluctuations of DIO Token
The lawsuit states that in 2021, FractureLabs sought to raise funds through an initial token offering for DIO on the Huobi exchange, now known as HTX. To facilitate this, they partnered with Jump Trading as a market maker for the DIO token.
This partnership entailed loaning 10 million DIO tokens to a Jump subsidiary, along with FractureLabs sending another 6 million DIO tokens to Huobi for sale during the offering.
During the offering, Huobi reportedly collaborated with social media influencers to market the DIO token, which caused its price to soar to $0.98. This surge raised the value of the tokens lent to Jump to $9.8 million.
However, the lawsuit alleges that Jump subsequently began to “systematically” offload its DIO token holdings, resulting in a significant decline in the token’s price, which fell to around $0.005, enabling Jump to reacquire the tokens for about $53,000 before returning them to FractureLabs and ending their market-making relationship.
Claims of Pump and Dump Scheme
FractureLabs also contends that Jump Trading masked its intentions to exploit the DIO public offering as a “pump and dump” scheme, purportedly in collusion with the HTX exchange.
Jump had reportedly assured FractureLabs that it would keep the price of the DIO token within specific limits set by Huobi for the listing. This assurance apparently failed, as the developer claims that Jump’s actions caused the token’s price to fall outside these established ranges, which led HTX to deny refunding a substantial part of a $1.5 million deposit that FractureLabs placed in Tether’s USDT stablecoin.
In a response to the situation, HTX commented, “As this matter is now subject to ongoing litigation, and HTX is not named as a defendant, we are unable to comment further at this time.”
As of now, the DIO token’s value stands at $0.014, marking a 171% increase since the beginning of the year.
Featured image from DALL-E, chart from TradingView.com
