Jane Street Accused of Insider Trading in New Lawsuit Tied to Terra’s 2022 Collapse

A fresh lawsuit has revived scrutiny of the catastrophic 2022 collapse of Terraform Labs, alleging that global trading powerhouse Jane Street used insider information that accelerated one of the most damaging breakdowns in digital asset history.

Liquidator Alleges Preemptive Trading Using Non Public Information

Todd Snyder, the court-appointed liquidator overseeing the bankruptcy of Terraform Labs, filed the complaint against Jane Street in U.S. federal court, according to details first reported by The Wall Street Journal.
The suit names co-founder Robert Granieri and employees Bryce Pratt and Michael Huang, accusing them of executing trades informed by confidential data obtained from inside Terraform.

Snyder argues that Jane Street positioned itself ahead of market moving events by acting on material, non public information at critical moments. He claims this behavior deepened panic during Terra’s unraveling and allowed the firm to profit as ordinary investors suffered losses.

“Jane Street leveraged its market relationships to manipulate outcomes during one of the most consequential events in crypto history,” Snyder said in a statement. “We will pursue all available legal remedies on behalf of the creditors harmed by this conduct.”

Background: Terraform Labs and a Historic Market Meltdown

Terraform Labs, founded in 2018 by Do Kwon and Daniel Shin, engineered the Terra blockchain ecosystem, including its LUNA token and the algorithmic stablecoin TerraUSD (UST).
When UST lost its dollar peg in May 2022, the ecosystem imploded. LUNA plunged to essentially zero within days, wiping out roughly 40 billion dollars in market value and triggering contagion across the broader crypto sector.

The company filed for bankruptcy in early 2024. Kwon later pleaded guilty to criminal charges and received a fifteen year prison sentence.

Key Events Cited in the Lawsuit

The lawsuit outlines a sequence of actions it argues demonstrate insider driven market behavior:

May 7, 2022: Terraform quietly withdrew 150 million UST from the Curve 3pool stablecoin liquidity pool.
Within minutes, a wallet allegedly tied to Jane Street withdrew an additional 85 million UST, contributing to destabilization before any public announcement.
May 9, 2022: As the peg collapsed, Pratt reportedly messaged Kwon offering to buy bitcoin or LUNA, prompting confusion inside Terraform about who had been informed of the firm’s emergency financing efforts.

Terraform later said the initial withdrawal was intended to move liquidity to a new pool, but by then, destabilization had already spread.

Jane Street Rejects Allegations

Jane Street firmly denied the claims, calling the case a baseless attempt to extract money from a collapsed ecosystem.

“This lawsuit is a desperate effort to pursue funds where none are owed,” a company spokesperson said. “Losses suffered by LUNA and UST holders were the direct result of the multibillion dollar fraud perpetrated by Terraform Labs’ leadership, not the actions of Jane Street.”

What Comes Next

If the case proceeds, discovery could expose internal communications, trading records, and liquidity operations related to one of crypto’s most infamous failures.
Legal experts note that the lawsuit could reshape how insider trading rules are interpreted in decentralized markets, where large traders often have privileged relationships with project founders.

For now, the filing adds yet another legal battle to the long list of litigation surrounding Terra’s downfall, ensuring that the story of the 2022 crash continues to reverberate across the industry.