Key Highlights
- Terraform’s court-appointed administrator has sued Jane Street, accusing it of using non-public information to trade ahead of the market.
- The lawsuit centers on suspicious TerraUSD withdrawals days before the stablecoin lost its dollar peg in May 2022.
- Jane Street has denied the claims, calling the case baseless and blaming Terraform’s management for the collapse.
The administrator in charge of shutting down Terraform Labs has sued trading giant Jane Street, accusing the firm of using inside information to profit from and speed up the collapse of the Terra crypto ecosystem.
The lawsuit was filed Monday in federal court in Manhattan by Todd Snyder, the court-appointed administrator overseeing Terraform’s bankruptcy, as per a report by the Wall Street Journal (WSJ). It seeks damages from Jane Street, its Co-Founder Robert Granieri, and employees Bryce Pratt and Michael Huang.
According to the complaint, Jane Street gained access to confidential information from Terraform insiders and used it to make well-timed trades as the project fell apart in May 2022.
Claims of inside information and market abuse
The lawsuit claims that Jane Street used its close ties with Terraform employees to get early access to important internal decisions before they were made public. According to the administrator, the firm then acted on this confidential information to trade ahead of the broader market, securing profits while other investors took heavy losses.
The complaint says Jane Street turned what appeared to be normal business discussions into a private channel for sensitive information, allowing it to position itself during one of the most volatile moments in crypto history.
How TerraUSD’s collapse unfolded
Terraform collapsed in May 2022 when its algorithmic stablecoin, TerraUSD, lost its peg to the US dollar. A related token, Luna, collapsed shortly afterward, erasing nearly $40 billion in market value in just a few days.
The fallout hit hundreds of thousands of investors worldwide, many of whom saw their savings disappear almost overnight. The fallout spread across the broader crypto market and later helped set the stage for the collapse of FTX, which at the time was run by Sam Bankman-Fried.
Suspicious trades before the market crash
According to the lawsuit, a key moment came on May 7, 2022. That evening, Terraform quietly removed 150 million TerraUSD from Curve3pool, one of the main liquidity pools used for stablecoin trading. At the time, the withdrawal had not been disclosed to the public.
Less than ten minutes later, a crypto wallet that analysts have linked to Jane Street withdrew 85 million TerraUSD from the same pool, according to the complaint.
The next day, Terraform Founder Do Kwon said the withdrawal was meant to move funds to a new liquidity pool. However, the lawsuit claims the exact timing of this move was not known to the market when Jane Street allegedly acted.
Private chats and former employee ties
The lawsuit says Jane Street’s trading activity picked up in early 2022 after Bryce Pratt, a former Terraform intern, was assigned to reconnect with his old colleagues.
Pratt allegedly created a private group chat with Terraform employees, including a software engineer and the company’s head of business development. The group chat was reportedly named “Bryce’s Secret” and was used to share Terraform-related information with Jane Street.
According to the filing, what began as talks about a possible Jane Street investment turned into a steady flow of confidential details that were later used for trading.
Continued trading and links to jump trading
After the May 7 trades, Jane Street allegedly continued using nonpublic information to trade TerraUSD, including information it learned from Jump Trading, the lawsuit claims.
On May 9, while TerraUSD had lost its peg but before it fully collapsed, Pratt reportedly set up a group message with Kwon, Huang, and other Jane Street employees. In the chat, Jane Street expressed interest in bidding on either Bitcoin or Luna.
Kwon responded that Jump co-founder Bill DiSomma should have contacted Jane Street to discuss a possible fundraising effort for Terraform, according to the complaint.
The lawsuit comes just two months after the administrator sued Jump Trading, accusing the firm of secretly supporting TerraUSD before its collapse and walking away with billions in profits.
Strong responses from both sides
“Jane Street abused market relationships to rig the market in its favor during one of the most consequential events in crypto history,” Snyder said in a statement. “On behalf of injured parties, we will pursue all avenues supported by the facts and the law against those who exploited their position and reaped substantial profits at the expense of Terraform Labs’ creditors.
Jane Street strongly denied the claims. “This desperate suit is a transparent attempt to extract money when it is well-established that the losses suffered by Terra and Luna holders were the result of a multibillion-dollar fraud perpetrated by the management of Terraform Labs,” a spokesman for Jane Street said. “We will defend ourselves vigorously against these baseless, opportunistic claims.”
Industry-wide impact
Jane Street has deep ties to the crypto industry. Both Sam Bankman-Fried and Caroline Ellison previously worked at the firm before leaving to start Alameda Research and later FTX.
Terraform filed for bankruptcy in January 2024, and a wind down trust was set up later that year. Kwon, who founded Terraform in 2018, is now serving a 15-year prison sentence after pleading guilty to two criminal charges in August.
The lawsuit adds another major legal battle to the ongoing fallout from one of the most damaging failures in crypto history.
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