TLDR
- Jane Street filed a motion in Manhattan federal court seeking dismissal of insider trading allegations from Terraform Labs’ administrator.
- Administrator Todd Snyder claims Jane Street and three staff members executed trades using confidential information.
- The allegations center on transactions made prior to the May 2022 TerraUSD and LUNA market collapse.
- Jane Street maintains innocence and attributes the ecosystem’s failure to Terraform’s fraudulent activities.
- The trading firm contends publicly available market signals preceded their TerraUSD token sales.
Jane Street has petitioned a Manhattan federal court to dismiss insider trading allegations related to the Terra collapse. The trading firm contested accusations from the administrator overseeing bankrupt Terraform Labs. The company requested the court reject the case with prejudice, blocking any future refiling.
Terraform Labs Administrator Brings Insider Trading Allegations Over TerraUSD Failure
Todd Snyder, the court-appointed administrator for Terraform Labs, initiated the lawsuit in February targeting Jane Street and three staff members. The complaint accuses the firm of executing Terra token transactions based on confidential information obtained from Terraform insiders. The filing specifically names co-founder Robert Granieri along with employees Bryce Pratt and Michael Huang.
The administrator alleges the defendants conducted TerraUSD and LUNA token transactions ahead of the ecosystem’s May 2022 collapse. He maintains that company insiders disclosed details regarding a liquidity pool transition via private communications. The complaint asserts these transactions amplified the damage and increased market-wide losses.
Terraform Labs experienced catastrophic failure when its algorithmic stablecoin TerraUSD broke from its dollar peg. The breakdown triggered a swift collapse of the associated LUNA token and eliminated approximately $40 billion in value. The bankruptcy estate currently pursues compensation from Jane Street and the named employees.
The legal filing contends Jane Street carried out substantial token sales during pivotal moments. The complaint maintains the firm gained advantage through advance knowledge of liquidity modifications. Snyder asserts the defendants operated on privileged nonpublic information while causing harm to other market participants.
Jane Street Requests Case Dismissal Against Terraform Labs Bankruptcy Estate
Jane Street submitted a dismissal motion in federal court on Thursday. The firm characterized the lawsuit as an attempt “to extract cash from Jane Street.” The motion asserts Terraform Labs itself executed the fraudulent scheme resulting in its downfall.
The filing declared, “Terraform now claims it was victimized by Jane Street’s trading.” It continued that Terraform’s fraudulent operation “has already been prosecuted, adjudicated, and punished.” Jane Street emphasized its complete lack of participation in any fraudulent activities.
The firm referenced the conviction of Terraform founder Do Kwon. Kwon entered a guilty plea to conspiracy and wire fraud charges. The court imposed a 15-year prison sentence.
Jane Street contends investors observed obvious public indicators of the impending collapse. The firm stated it divested “a deteriorating investment as the market was visibly collapsing.” The motion argues Terraform’s own filing weakens its insider trading allegations.
The firm highlighted that the most significant TerraUSD transaction took place 10 minutes following public disclosure of the information. The motion maintains Terraform failed to pinpoint any particular material nonpublic information transmitted to Jane Street. The filing states the complaint depends on allegations made “on information and belief.”
Jane Street asserts Terraform cannot identify any correspondence revealing the liquidity pool timing. The firm stresses that comprehensive pre-litigation discovery produced no supporting evidence. Jane Street requested the court dismiss the case with prejudice, which would prevent future claims based on identical grounds.
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