Key Takeaways
- Terraform’s bankruptcy administrator has sued Jane Street for alleged insider trading tied to the UST depeg.
- The complaint claims Jane Street withdrew 85 million UST from Curve’s 3pool minutes after Terraform removed 150 million UST.
- Jane Street denies wrongdoing, calling the lawsuit a “desperate” attempt to shift blame from Terraform’s own executives.
Nearly four years after the Terra-Luna collapse helped plunge crypto into a brutal winter, the fallout is still unfolding in court.
Terraform Labs’ bankruptcy administrator has filed an explosive lawsuit against Jane Street Group, accusing the Wall Street trading giant of insider trading and market manipulation during the critical hours that led to the collapse of TerraUSD (UST) in May 2022.
A Lawsuit That Reopens Crypto’s Deepest Wound
The 83-page complaint, filed Feb. 23 in federal court in New York by court-appointed administrator Todd Snyder, alleges that Jane Street did more than simply survive the implosion of the algorithmic stablecoin ecosystem.
It claims the firm exploited confidential information and private communications to exit risky positions and profit while the system unraveled.
Jane Street has strongly denied the allegations, describing the case as “desperate” and “baseless,” and arguing that the losses stemmed from fraudulent conduct by Terraform’s leadership — particularly founder Do Kwon.
But the lawsuit revives one of the most consequential episodes in crypto history — and raises fresh questions about how Wall Street firms operate in supposedly decentralized markets.
Jane Street in the Crosshairs
The complaint names Jane Street Group, co-founder Robert Granieri, and two employees: Bryce Pratt and Michael Huang.
According to the filing, the relationship between Terraform and Jane Street dates back to 2018.
But the alleged misconduct centers on events in early 2022, as UST began to show signs of instability.
The lawsuit claims that in February 2022, Bryce Pratt — a former Terraform intern — established a private group chat titled “Bryce’s Secret” with a Terraform software engineer and the company’s head of business development.
The complaint alleges that this channel enabled the transmission of sensitive, non-public information to Jane Street.
Pratt is also accused of initiating email communications that connected Terraform personnel with Jane Street’s DeFi team, allegedly providing what the complaint calls “material non-public information.”
Jane Street disputes this characterization and maintains it did nothing improper.
Still, the lawsuit paints a picture of an information pipeline that, according to Snyder, gave the trading firm a decisive edge during the most fragile moments of the UST peg.
The May 7 Trigger
At the heart of the case is a ten-minute window on May 7, 2022.
That day, Terraform quietly withdrew 150 million UST from Curve’s 3pool — one of the primary liquidity pools used for stablecoin trading.
The move was not immediately disclosed to the broader market.
Less than ten minutes later, according to the lawsuit, a wallet associated with Jane Street withdrew 85 million UST from the same pool — at the time, the largest transaction ever recorded in that pool.
The combined removal of 235 million UST severely destabilized liquidity. UST slipped below its $1 peg, and panic began to spread.
The lawsuit alleges that Jane Street effectively front-ran the developing crisis, allowing it to liquidate hundreds of millions of dollars in high-risk positions before the broader market reacted.
The firm’s actions, Snyder claims, both shielded it from catastrophic losses and accelerated the collapse.
Inside the Collapse
The complaint also details communications that allegedly occurred as the crisis deepened.
On May 9, with UST trading below $0.80, Pratt is said to have initiated further communications with Do Kwon and Jane Street colleagues.
According to the lawsuit, he proposed purchasing Bitcoin or LUNA at substantial discounts.
The filing also references Bill DiSomma, co-founder of Jump Trading, suggesting that Jane Street may have received additional information about potential Terraform fundraising efforts.
Snyder’s accusation is blunt.
“Jane Street exploited market relationships to manipulate the market to its advantage during a pivotal event in cryptocurrency history,” he said in the complaint.
He added that the firm generated substantial profits “at the detriment of Terraform Labs’ creditors,” and pledged to pursue every legal avenue to recover funds for victims.
This is not the first such case.
In December 2025, Snyder filed a separate $4 billion lawsuit against Jump Trading, alleging similar misconduct tied to Terraform’s collapse.
The Death Spiral
The Terra ecosystem’s collapse has been dissected countless times, but the lawsuit reframes the trigger event in stark terms.
UST had already been wobbling in early May 2022.
But critics have long argued that liquidity fragility made the system vulnerable to a large, coordinated withdrawal.
The May 7 removal of 235 million UST from Curve’s primary liquidity pool — first by Terraform, then by Jane Street — proved catastrophic.
Terraform later said the 150 million UST withdrawal was preparation for a new “4pool” liquidity structure involving other stablecoins.
However, the timing, and Jane Street’s immediate subsequent trade, remained controversial.
Once the peg cracked, the algorithmic mechanism meant to restore stability began printing LUNA to absorb UST redemptions.
Instead of restoring confidence, it triggered a self-reinforcing spiral.
By May 9, UST had fallen below $0.80.
By May 13, it was trading below $0.15 and effectively worthless. LUNA collapsed to fractions of a cent.
Retail investors who had parked savings in Anchor Protocol for its advertised 20% yield saw life savings evaporate.
Some lost homes and retirement funds. The collapse erased tens of billions of dollars in value and sent shockwaves across the crypto industry.
Jane Street Pushes Back
Jane Street rejects the narrative that it played a manipulative role.
A spokesperson told reporters the suit is “a transparent attempt to extract money when it is well-established that the losses… were the result of a multi-billion dollar fraud perpetrated by the management of Terraform Labs.”
The firm has vowed to fight the case in court.
If proven, the allegations would mark one of the most significant insider-trading cases in crypto history — and a rare instance where a major traditional finance firm faces accountability over digital asset market conduct.
More broadly, the lawsuit underscores a persistent tension in crypto markets: even in ecosystems marketed as decentralized and permissionless, information asymmetry and high-speed trading can create uneven playing fields.
The courts will ultimately determine whether Jane Street crossed a legal line.
But regardless of the outcome, the case reopens uncomfortable questions about how power operates in crypto — and who pays the price when systems fail.
For investors still nursing the scars of 2022, the battle over Terra’s collapse is far from over.
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Prashant Jha is a seasoned crypto journalist based in Delhi, India, with a Bachelor’s Degree in Computer Science Engineering. Passionate about the evolving world of blockchain and cryptocurrencies, he has been a dedicated voice in the industry since 2018. Prashant’s expertise lies in regulatory reporting, where he unravels complex legal and financial developments with clarity and precision. Before joining CCN in 2024, he honed his craft at Cointelegraph, establishing himself as a trusted name in crypto journalism.
His coverage spans major industry events, including the high-profile collapses of FTX, Three Arrows Capital (3AC), and LUNA, offering readers insightful analyses of their regulatory and market implications. Prashant’s technical background enables him to bridge the gap between intricate blockchain technology and its real-world applications, making his work accessible to novices and experts.
Beyond his professional pursuits, Prashant is an avid music enthusiast, often exploring diverse genres to unwind. A sports lover, he has a particular passion for cricket and frequently engages in discussions about the game. His multifaceted interests and sharp journalistic instincts make him a valuable contributor to CCN, where he continues shaping the crypto landscape's narrative.
