The Trading Powerhouse’s $320 Million Save Indicates Cryptocurrency -Rich

This week’s $320 million blockchain hack provides a tantalising glimpse of Jump Trading Group’s colossal presence in cryptocurrencies.

Jump was always notoriously tight-lipped about its operations, even as it grew into a quiet giant of financial markets over the course of two decades. People took notice when the Chicago-based trading firm began talking openly about its crypto ambitions last year. However, some secrets remained. For example, how much money does the company make in cryptocurrency?
Its quick decision to fully refund all losses incurred as a result of Wednesday’s hack reveals a lot.

The company’s Jump Crypto division is a driving force behind the creation of Wormhole, which serves as a link between crypto ecosystems such as Ethereum and Solana. On February 2, someone exploited a Wormhole software bug to steal 120,000 Ether worth hundreds of millions of dollars. Jump acted almost immediately, fully reimbursing the losses.

Jump’s spokeswoman declined to comment.

Deal with Robinhood

So, where did this cryptocurrency fortune come from? One option is to use Robinhood Markets Inc.’s popular brokerage app. Jump pays Robinhood, and in exchange, Robinhood sends its clients’ cryptocurrency trades to Jump, who executes them.

According to a Securities and Exchange Commission filing, those payments to Robinhood accounted for 17 percent of the broker’s total revenue during the first nine months of last year. Jump paid approximately $247 million for the right to receive orders from Robinhood. Jump’s profits are most likely greater.

Jump sees itself as more than just a trader in the cryptocurrency space: It wishes to contribute to the development of the basic infrastructure of the emerging industry. That’s what brought it to Wormhole in the first place. It acquired Certus One, which assisted in the development of Wormhole, in August of last year.

Jump also contributes to other cryptocurrency projects, such as Pyth, which provides regular people with access to the turbocharged data feeds used by some of the world’s most sophisticated traders.

Jump didn’t seem to mind having to cough up money to cover a loss that would have killed other trading firms. Kanav Kariya, who took over as CEO of Jump Crypto last year at the age of 25, spent the hours following the incident responding to tweets about it.

Hands of Prayer

He used the praying hands emoji in response to a tweet from Wednesday that said, “Don’t bet against a team willing to put up $300 million of their own money to make users whole.”

“I learned yesterday that crypto doesn’t know who Jump Trading is,” tweeted @IamNomad on Thursday. “Jump ranks among the top five largest and best-capitalised trading firms in the world.” They have at least 40 people dedicated to cryptocurrency.”

 

Disclaimer: These are the writer’s opinions and should not be considered investment advice. Readers should do their own research.

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