The liquidators of Terraform Labs have filed a federal lawsuit accusing Jane Street of insider trading<\/strong> 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<\/strong> while retail investors lost everything as UST and LUNA collapsed.<\/p>\n 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<\/strong> and executed an 85 million UST sale on May 7, 2022<\/em>\u2014mere minutes after receiving confidential instructions to withdraw liquidity from key pools.<\/p>\n 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.<\/p><\/blockquote>\n The lawsuit contextualizes Jane Street’s trading within one of crypto’s most destructive episodes<\/strong>, describing Terra’s failure as a $40 billion collapse<\/em> that triggered cascading liquidations and contributed to broader credit crunches across digital asset markets.<\/p>\n 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”<\/strong> and notes that Jane Street’s largest UST sale occurred ten minutes after<\/em> the alleged insider information became visible to the market.<\/p>\n The trading firm frames the lawsuit as an attempt to plug Terra’s financial hole using another company’s balance sheet<\/strong>. A Jane Street spokesperson stated:<\/p>\n “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.”<\/p><\/blockquote>\n Jane Street contends it simply sold a deteriorating investment<\/em> 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.<\/p>\n The case sits at the intersection of market-structure reality and post-crash scapegoating<\/strong>: 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.<\/p>\n Regardless of outcome, the lawsuit ensures that the forensic fight over who truly accelerated Terra’s $40 billion destruction<\/em>\u2014Terraform itself, Jane Street, or some combination\u2014will play out in open court.<\/p>\n","protected":false},"excerpt":{"rendered":" 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 M…<\/p>\n","protected":false},"author":3,"featured_media":19637,"comment_status":"closed","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[48],"tags":[11774,9651,11222,4217,4206,5559,4205,9894],"class_list":["post-19638","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-legal","tag-dl-news","tag-do-kwon","tag-jane-street","tag-legal","tag-luna","tag-terra","tag-ust","tag-wall-street-journal"],"yoast_head":"\nThe Allegations and Trading Activity<\/h2>\n
Jane Street’s Defense and the Core Dispute<\/h2>\n
The Broader Legal and Market Questions<\/h2>\n