Fracture Labs alleged that Jump Crypto had violated its contract and orchestrated a pump-and-dump scheme. The case was filed in the U.S. Court of Appeals for the Northern District of Illinois on October 15.

Fracture Labs is the developer of a post-apocalyptic survival game called “Decimated,” which DIO has a market cap of around $10 million. The company argues that Jump Crypto, in cooperation with the Huobi exchange (now known as “HTX”), froze $1.4 million of the developer’s funds and refused to return it.

Jump Crypto, the crypto division of Jump Trading Group, provides market making services and conducts research on blockchain technology.

HTX is the eighth-largest crypto exchange globally with daily trading volume exceeding $1.8 billion, according to CoinMarketCap data. This exchange, formerly known as Huobi, was rebranded as HTX in September 2024.

In the fall of 2021, Jump Crypto offered to provide Fracture Labs with market-making services and “consultancy and advice” on promoting crypto exchanges, the lawsuit alleges.

In December 2021, Jump signed an agreement to provide market-making services for the launch of the game’s token, DIO. Fracture Labs originally planned to launch the token on the KuCoin exchange; but upon Jump’s recommendation, it launched at HTX.

As part of the agreement, Fracture Labs agreed to lend 30 million DIO tokens to Jump Crypto. Additionally, he deposited $1.5 million worth of Tether stablecoin on the HTX exchange. This deposit was described as a “security deposit” to protect HTX against market manipulation or pump-and-dump schemes.

The agreement established certain “price parameters” that must be met during the first 180 days. If these parameters were met, the deposit would return to the developer after six months. However, if these parameters were not met, HTX had the right to impose penalties.

Jump Crypto stated to Fracture Labs that they would comply with these price parameters and that the team was encouraged to sign the agreement.

Fracture Labs also agreed to pay HTX 200,000 USDT and 100,000 DIO marketing fees. This fee was used to persuade “online influencers” to promote the exchange’s DIO token.

When the DIO token was launched on December 29, it reached $0.98 on the first day. However, when the price of Jump’s token dropped to $0.90, the price dropped to $0.53 as a result of the mass sale of borrowed DIO tokens.

Jump Crypto processed $6.9 million in DIO transactions within a month, causing the price to drop to $0.26. Later, the token price dropped to $0.0054.

Fracture Labs stated that Jump Crypto suffered losses because it sold the token without demand. He also pointed out that Jump Crypto undercut DIO’s price and committed fraud for its own profit rather than as a market-making service.

The company argues that the loss of $ 1.38 million occurred due to the sale of Jump Crypto. The lawsuit alleges that Jump Crypto’s sales pushed the token price outside agreed parameters and HTX deducted nearly all of the deposit.

Cointelegraph contacted Jump Crypto asking for comment, but did not receive a response. The allegations made in the lawsuit have not yet been proven in court and there is a legal period for Jump Crypto to respond.

HTX stated that it could not comment further on the issue and stated that it continues to operate in full compliance with the law. Crypto users have long speculated that market makers manipulate prices during token launches, but evidence of this has been difficult to provide.