Terraform Labs Liquidators Sue Jane Street Over Alleged $134 Million Insider Trading Profit
The liquidators of Terraform Labs have filed a federal lawsuit accusing Jane Street of insider trading during the catastrophic May 2022 Terra/LUNA collapse. According to the complaint filed in the Southern District of New York and reviewed by Financial Times, the trading giant allegedly used material, non-public information obtained from Terraform insiders to front-run market-moving events while retail investors lost everything as UST and LUNA collapsed.
The Allegations and Trading Activity
The lawsuit names Jane Street, co-founder Robert Granieri, and traders Bryce Pratt and Michael Huang as defendants. The complaint alleges that Jane Street coordinated UST trades through private Telegram chats and executed an 85 million UST sale on May 7, 2022—mere minutes after receiving confidential instructions to withdraw liquidity from key pools.
The Terraform plan administrator claims these trades generated “approximately $134 million in unlawful profits” while Terra’s algorithmic stablecoin lost its peg and the ecosystem unraveled within days.
The lawsuit contextualizes Jane Street’s trading within one of crypto’s most destructive episodes, describing Terra’s failure as a $40 billion collapse that triggered cascading liquidations and contributed to broader credit crunches across digital asset markets.
Jane Street’s Defense and the Core Dispute
Jane Street categorically denies the allegations and has moved to dismiss the case. The firm argues that the administrator “failed to identify any material, non-public information supposedly received by Jane Street” and notes that Jane Street’s largest UST sale occurred ten minutes after the alleged insider information became visible to the market.
The trading firm frames the lawsuit as an attempt to plug Terra’s financial hole using another company’s balance sheet. A Jane Street spokesperson stated:
“This lawsuit is a desperate effort to pursue funds where none are owed. The losses experienced by LUNA and UST holders are the direct result of the multibillion-dollar fraud perpetrated by Terraform Labs’ leadership, not the actions of Jane Street.”
Jane Street contends it simply sold a deteriorating investment as public signs of Terra’s failure emerged, arguing that both sophisticated firms and retail traders reacted to the same information as the peg broke.
The Broader Legal and Market Questions
The case sits at the intersection of market-structure reality and post-crash scapegoating: a high-frequency trading firm that profited through rapid execution versus a liquidator attempting to reframe that speed as illicit access to inside information. The plaintiff seeks to claw back the alleged $134 million plus additional damages.
Regardless of outcome, the lawsuit ensures that the forensic fight over who truly accelerated Terra’s $40 billion destruction—Terraform itself, Jane Street, or some combination—will play out in open court.
