“For us, it’s just thinking about the right opportunities as the market turns,” Kanav Kariya said.
Twelve weeks and $1 trillion ago, Kanav Kariya posed a question to thousands of people in Spain glorifying cryptocurrency: “Who’s the f**k jump?”
Before the crypto went bad and then it got worse. Before the spectacular collapse of Luna and TeraUSD, the digital currency that was believed to be securely pegged to the dollar. This was before bitcoin plunged into a vicious bear market and people started whispering about “crypto winter”.
First of all, 26-year-old Karia was her relentless spirited nature. Dressed in flip-flops and an orange jacket, he resumed a conference in Barcelona about his crypto ambitions at Jump Trading, a typically hush-hush private firm that became one of Chicago’s soon-to-be Chicago commodities. Exiting the pits and entering the “Flash Boys”. The realm of high-speed, electronic trading.
Today, despite everything, Kariya is giving a bang. Speaking Wednesday from Jump’s tech-chic Chicago offices — white boards, glass walls, green-velvet chairs — the president of Jump’s crypto business expressed a belief that seems out of step with doom and gloom elsewhere. Jump Crypto is hiring, not firing, he said. The place is bouncing. The summer interns have arrived. Everyone feels energized.
“When markets become so volatile – and we are seeing real madness – there is an opportunity to really dig in and be different,” Karia said. “We are not exposed, we are not suddenly caught in a bunch of uneducated positions. For us, it is thinking about the right opportunities as the market turns.”
But the question from Spain still haunts — and not just for Jump, one of the world’s largest high-frequency trading firms.
The crypto craze that has spread across the world over the past two years has turned panic and now something deep. Slowly, the global digital asset industry – a 24/7 ecosystem of miners, traders, exchanges and more – seems to be weakening. On Sunday, crypto lender Celsius Network Ltd abruptly halted withdrawals. On Tuesday, some employees of exchange Coinbase Global Inc. found their corporate email accounts disabled. Coinbase, it turned out, was cutting 18% of its workforce. As of Friday, digital asset lender Babel Finance had also halted withdrawals. And Three Arrows Capital, a leading crypto hedge fund, is facing liquidity problems that have rattled the industry.
Coinbase co-founder Brian Armstrong was blunt: this crypto winter, he told employees in a memo, “could last for an extended period.”
Those trading decent jobs on Wall Street and Silicon Valley for crypto dreams are struggling to reconcile those options and pick up the pieces.
If any of these were jumping, you’d never know it.
Inside their offices in the Hawking Montgomery Ward Building, the old headquarters of the shuttered American merchandising empire, some employees play foosball and order custom smoothies. The crypto team is head down, surrounded by their monitors, while traders and engineers work hard on the firm’s crypto strategies. Jump is pushing the creation of a co-working space called ‘The Pit’, which is designed to host crypto entrepreneurs who will help fund.
Jumped into digital currencies with a long, successful history in Wall Street-style proprietary trading. In futures and equities, it squeezes out large profits from small price movements, profiting from wild swings in volatility.
As the pain spreads to both traditional and crypto markets, it is worth keeping an eye on Jump. How Kariya and her crew will weather will provide clues about when crypto spring will, or might, come.
Karia stressed that JumpCrypto will emerge stronger once the crypto weaknesses are isolated. As far as the jump is concerned, the firm’s strategy has not changed, he said, with assurances of November 2021, when bitcoin was flying high at around $69,000, rather than June 2022 when it traded at over $20,000. was doing.
So who is Jump? Almost unknown outside financial circles, it is a major global player in futures, options, equities and crypto. Since its founding in 1999, it has morphed from an old-school pit trader into an electronic-trading powerhouse into a major force in algo-driven, high-frequency trading. More than six years ago, before the bitcoin craze took hold, it had gotten into crypto.
Founders Paul Guerinas and Bill DiSoma, who met at Deutsche Mark Pitt on the Chicago Mercantile Exchange, have rarely created an air of mystery around this space by talking to the news media about their strategies from the start. He declined to be interviewed for this story. Jump manages only its internal capital, rather than answering it to external investors.
Jump Crypto has taken the opposite approach. Rather than avoid the public, Kariya has chosen to engage with social media, even these days, with crypto melting. In now familiar industry language, he said, Jump must build “communities” and “ecosystems” to be successful in crypto.
Few traditional financial players have delved deeper into crypto than Jump, or in many different ways. Karia initially signed on in 2017 as part of an internship she created at the University of Illinois at Urbana-Champaign. Earlier Guerinas and DiSoma considered digital currencies to be a real business. The intern was asked to create a gateway for the various exchanges that would allow traders to arbitrate the price difference for bitcoin.
Kariya was among the first 15 full-time, dedicated employees hired at Jump’s crypto arm. Today, Jump Crypto employs about 150 people.
Jump Crypto aims not only to process trades for counterparties and for Jump’s own accounts, but also to invest in startups and build crypto “infrastructure”. These include Wormhole – the crypto platform that was the subject of a heist earlier this year, Damage Jump fully refunded. There are also the Solana and Pyth networks, the projects that ultimately underpin the market.
When asked about Jump Crypto’s immediate plans this week in light of the recent turmoil, Kariya said they are proactive. “We are still growing and are looking at investment opportunities to come in the coming weeks,” as the valuation contract opens, he said.
As a private business, Jump Trading Group does not disclose its financial results. But the firm has benefited from being in crypto during different periods, progressing in times of volatility on the trading side, and losses when it hacks or drops in prices. The size of any profit remains an open question. Firm and Karia prefer to talk more about their ambitions in abstract rather than specific figures.
At the same time, industry players say that when it comes to crypto, Jump is seen as a bigger risk taker than most traditional trading firms. Competitors such as Jane Street and Susquehanna International Group also have venture capital arms that make crypto-related investments. But none of them operate at the scale of Jump or integrate trading and incubating startups like Jump.
Jump’s approach is not without its dangers. Since Kariya was named chairman nine months ago, before the peak of 2021 and the fall of 2022, Jump Crypto has consumed hundreds of millions of dollars in customer losses from the wormhole hack. But the speed at which Jump closed the $320 million hole suggests that Jump was making a lot of money on crypto before.
Jump Crypto also got caught up in the implications of the Terra stablecoin failure – having been backing the project since 2019. In February, Jump Crypto and Three Arrows Capital co-led a $1 billion fundraising nonprofit management for the Luna Foundation Guard. The Luna and TeraUSD tokens, in a private token sale, attempt to increase trust in the Terra stablecoin.
There was buzz on social media and in the markets that support for JumpCrypt created a false sense of trust in Terra. Others speculated that the firm incurred significant losses during Depp. In multiple interviews, Jump executives declined to discuss Terra or Luna in more detail, beyond saying that Jump Crypto grabbed the Luna token and bought TeraUSD as the peg for the dollar began to break out in May. Was. Jump declined to comment on whether it had profited from Luna before Depeg.
Looking back, Kariya said that Jump would never have invested in the Terra project if it had known that the end result would be catastrophic for some investors. But Jump Crypto evolved from a trading culture where conviction and discipline matter more than emotion, he said. The recession hasn’t changed his team’s general approach to business, VC-style investing, and project development.
“We will continue to make significant investments in this area over the next few years,” Karia said. Over time, blockchain technology will not live up to its promise, even if many digital currencies become worthless or die.
He said that he and his team are adamant. “Mostly I feel a lot more positive,” he said. “If we didn’t have conviction, we’d just wind up.”