TLDR
- Jane Street moved to dismiss insider trading allegations brought by Terraform Labs’ bankruptcy estate in Manhattan federal court
- The trading firm contends the lawsuit attempts to blame others for fraud Terraform perpetrated
- Do Kwon, Terraform’s creator, has already admitted guilt to conspiracy and wire fraud charges, receiving a 15-year prison term
- Jane Street contends its most significant transactions occurred after critical details were publicly available
- The firm seeks dismissal with prejudice, preventing Terraform from refiling identical claims
In a Manhattan federal courtroom, trading powerhouse Jane Street has requested dismissal of allegations lodged by Terraform Labs’ bankruptcy estate. The complaint accused the firm of engaging in insider trading that exacerbated the devastating 2022 Terra ecosystem meltdown.
🚨LATEST: Jane Street has filed to DISMISS Terraform Labs’ insider trading lawsuit over the UST/LUNA collapse.
Case so far:
1. Terraform sued Jane Street, blaming it for the collapse via insider trading and market manipulation
2. Jane Street says its largest trades occurred… pic.twitter.com/Mj60RkgGvf
— Coin Bureau (@coinbureau) April 24, 2026
The lawsuit was initiated in February by Todd Snyder, the court-designated administrator for Terraform. Named defendants include Jane Street itself, along with co-founder Robert Granieri and staff members Bryce Pratt and Michael Huang. The allegations center on claims they leveraged confidential information obtained from Terraform insiders to trade Terra-related tokens.
In its dismissal motion, Jane Street delivered a forceful rebuttal. The firm characterized the litigation as a calculated effort “to extract cash from Jane Street to foot the bill for a fraud that Terraform itself perpetrated on the market.”
The Terra network’s implosion in May 2022 stands as one of crypto’s most catastrophic failures. Its algorithmic stablecoin, TerraUSD, dramatically lost its peg to the dollar. The cascading failure triggered LUNA token’s complete collapse, obliterating approximately $40 billion in market capitalization.
Criminal Proceedings Have Already Concluded
Jane Street’s primary defense rests on the fact that the underlying fraudulent conduct has already been adjudicated. Do Kwon, who founded Terraform, entered guilty pleas to conspiracy and wire fraud charges last December. He is currently incarcerated, serving his 15-year sentence.
Additionally, a jury determined that both Terraform and Kwon bore civil liability for securities fraud. The filing notes that Kwon personally acknowledged being “alone responsible for everyone’s pain.”
Jane Street maintains it played no role in Terraform’s fraudulent operations and argues that reopening questions about what caused the collapse through this civil action is legally inappropriate.
The trading firm invoked the “Wagoner rule,” a legal doctrine preventing bankruptcy estates from pursuing third-party defendants to recover damages stemming from their own fraudulent conduct.
Trading Timeline Undermines Insider Claims
Jane Street systematically dismantled the insider trading accusations. The firm highlighted that its most substantial TerraUSD sale executed merely 10 minutes after the purportedly confidential information became market-visible.
According to the filing, Terraform alleged Jane Street gained unfair advantages through “back-channel communications” regarding when a liquidity pool would transition. However, Jane Street asserts that Terraform couldn’t pinpoint even one specific communication, despite conducting thorough pre-litigation discovery.
Jane Street further emphasized that the liquidity pool transition had been disclosed publicly several weeks before any relevant trading activity, and no notable market movement followed that announcement.
The firm established short positions starting May 8, 2022, with asset sales occurring on May 7. Jane Street maintains that Terraform has failed to identify any information that qualified as both material and confidential during those trading windows.
Additionally, Jane Street challenged the court’s jurisdiction, asserting that Terraform hasn’t demonstrated the disputed transactions occurred within United States territory.
Jane Street requests the court grant dismissal with prejudice, a ruling that would permanently bar Terraform’s estate from pursuing these allegations in future proceedings.
Get 3 Free Stock Ebooks
Discover top-performing stocks in AI, Crypto, and Technology with expert analysis.
- Top 10 AI Stocks - Leading AI companies
- Top 10 Crypto Stocks - Blockchain leaders
- Top 10 Tech Stocks - Tech giants
