Jane Street: Crypto’s New Villain or Just a Bad Day?

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Key Highlights (Or How to Ruin a Crypto Empire in 3 Easy Steps)

  • Terraform’s court-appointed administrator has sued Jane Street, accusing it of using nonpublic information to trade ahead of the market. Because, obviously, who needs ethics when you’ve got a spreadsheet?
  • The lawsuit centers on suspicious TerraUSD withdrawals days before the stablecoin lost its dollar peg in May 2022. AKA, the day the crypto world learned “peg” isn’t a word you want to hear.
  • Jane Street has denied the claims, calling the case baseless and blaming Terraform’s management for the collapse. Because nothing says “I’m innocent” like accusing the victim of being a bad manager.

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. Because apparently, they had a better idea of the market’s next move than your grandma’s horoscope.

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. Because nothing says “I’m a serious legal professional” like suing a bunch of guys who probably just wanted to make a quick buck.

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. Because nothing says “ethical business practices” like trading on secrets you shouldn’t have.

Claims of Inside Information and Market Abuse (Or How to Get Rich Quick in 5 Days)

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. Because, of course, the market is a charity.

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. Because nothing says “I’m a responsible trader” like creating a secret chat with your rivals.

How TerraUSD’s Collapse Unfolded (Or Why Your Savings Disappeared)

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. Because apparently, the crypto gods were feeling particularly spiteful that week.

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. Because nothing says “financial stability” like a chain of disasters.

Suspicious Trades Before the Market Crash (Or When the Bots Started Dancing)

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. Because, obviously, transparency is overrated.

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. Because patience is a virtue… and so is timing your trades to the second.

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. Because, of course, the market is always asleep during critical moments.

Private Chats and Former Employee Ties (Or How to Sell Secrets for Fun and Profit)

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. Because nothing says “I’m a loyal employee” like getting a job at a rival firm and starting a secret chat.

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. Because, obviously, “Bryce’s Secret” is a code name for a conspiracy.

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. Because, of course, every investment discussion is a secret handshake.

Continued Trading and Links to Jump Trading (Or Why Everyone’s a Criminal)

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. Because, of course, Jump Trading is just another name for “I’m a thief.”

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. Because, obviously, the only thing more exciting than a crypto crash is a bidding war for a dying token.

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. Because, of course, the only way to save a failing project is to ask the people who caused its collapse for a loan.

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. Because, of course, everyone’s a winner in this story-except the investors.

Strong Responses from Both Sides (Or How to Sound Like a Lawyer and a Liar)

“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.” Because, of course, the facts are always on your side.

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.” Because, of course, the only fraud here is the lawsuit.

A Case with Industry-Wide Impact (Or Why No One Trusts Anyone Anymore)

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. Because, of course, the only thing worse than a crypto crash is a jail sentence.

The lawsuit adds another major legal battle to the ongoing fallout from one of the most damaging failures in crypto history. Because, of course, the only thing more fun than a crypto crash is a courtroom drama.

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2026-02-24 06:28