Jane Street Sued Over Alleged Insider Trading in Terra Crash Collapse Case

TLDR

• Terraform administrator Todd Snyder sued Jane Street over alleged insider trading.
• Complaint claims non-public information was used before TerraUSD collapse.
• Lawsuit cites a May 7, 2022 TerraUSD liquidity pool withdrawal.
• Jane Street denies claims and blames Terraform management for losses.

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Jane Street is facing a lawsuit that accuses the firm of insider trading linked to the collapse of Terraform Labs. The complaint claims the trading firm used confidential information to exit positions before the Terra ecosystem failed. Todd Snyder, the court appointed administrator overseeing Terraform Labs’ liquidation, filed the lawsuit in Manhattan federal court. 

He named Jane Street, co-founder Robert Granieri, and employees Bryce Pratt and Michael Huang as defendants. The lawsuit alleges that Jane Street obtained material non-public information from Terraform insiders. It claims the firm used that information to sell tokens tied to the Terra blockchain before the market crash.

Allegations of Insider Trading Before Terra Collapse

According to the complaint, Jane Street built communication channels with former Terraform employees. Bryce Pratt, a former intern at Terraform, is accused of reconnecting with former colleagues after joining Jane Street. Snyder claims these contacts provided confidential updates about Terraform’s operations. The lawsuit states that this information was shared through private chat groups and direct messages.

One key event cited in the complaint occurred on May 7, 2022. Terraform withdrew 150 million TerraUSD from the Curve3pool liquidity pool without a public announcement. Within ten minutes, a wallet allegedly linked to Jane Street withdrew 85 million TerraUSD from the same pool. The lawsuit claims this was Jane Street’s largest single swap involving the token.

Snyder alleges that the timing of the withdrawal was not public knowledge. He claims the move triggered heavy selling pressure that contributed to TerraUSD losing its dollar peg. The complaint states that Jane Street sold “hundreds of millions of dollars in potential exposure at precisely the right time.” It alleges the trades occurred only hours before the ecosystem collapsed.

Claims of Coordinated Communication and Market Activity

The lawsuit also references communication involving Terraform founder Do Kwon. On May 9, during the depeg crisis, Pratt allegedly created a group message with Kwon and Jane Street representatives. According to the complaint, Pratt expressed interest in bidding on Luna or bitcoin. 

Kwon reportedly replied that Jump Trading co-founder Bill DiSomma should have already contacted them about a fundraiser. Snyder claims some of the non-public information may have passed through Jump Trading. Jump was sued separately in December for alleged conduct tied to Terra’s collapse.

The administrator alleges Jane Street used sensitive information throughout the market turmoil. He claims this allowed the firm to limit losses while other investors faced steep declines. Snyder is seeking damages, disgorgement of profits, and interest. The case requests a jury trial in federal court.

Jane Street Responds to the Lawsuit

Jane Street has rejected the allegations. In a statement to media outlets, the firm described the claims as “baseless, opportunistic claims.” The company stated that the losses suffered by Terra and Luna holders were caused by a “multi billion dollar fraud” by Terraform’s management. It said it will defend itself vigorously in court.

Terraform Labs collapsed in May 2022 after TerraUSD, an algorithmic stablecoin, lost its peg to the US dollar. The event erased about $40 billion in market value and led to broader crypto market stress. Terraform filed for bankruptcy in 2024. The company later agreed to pay $4.47 billion in penalties to the Securities and Exchange Commission.

Do Kwon pleaded guilty in the United States to two criminal charges. He was sentenced to 15 years in prison in December. The lawsuit against Jane Street adds to ongoing legal actions tied to the Terra collapse. The court will now examine whether insider trading played a role in the events that led to the failure of the Terraform ecosystem.

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