Terra-Luna Collapse: Wall Street Giant Jane Street Accused of Insider Trading in Fresh Lawsuit

New developments have emerged in the infamous Terra-Luna collapse of 2022, an event that sent shockwaves through the crypto world and wiped out an estimated $40 billion in market value. Terraform Labs’ bankruptcy liquidator has formally filed a lawsuit, alleging that Wall Street quantitative trading powerhouse Jane Street engaged in insider trading, thereby accelerating the catastrophic downfall of the Terra empire.

Allegations Unveiled: Jane Street, Former Terraform Employee, and Secret Information Channels

According to a report by The Wall Street Journal, Terraform’s liquidator, Todd Snyder, submitted a complaint to the court on Monday. The lawsuit names Jane Street, its co-founder Robert Granieri, and employees Bryce Pratt and Michael Huang as defendants. You can read the full report here.

The core of the complaint centers on Bryce Pratt, a former Terraform Labs employee who later joined Jane Street. Snyder alleges that Jane Street deliberately assigned Pratt to leverage his pre-existing relationships and “private friendships” with former colleagues at Terraform Labs, including software engineers and business development executives. This network, according to Snyder, formed a “private chat group” that served as a clandestine conduit, channeling critical internal intelligence from Terraform Labs directly to Jane Street. This alleged scheme allowed the Wall Street giant to gain privileged, non-public information, enabling it to execute insider trades and profit before the market’s eventual collapse.

The Critical UST Withdrawal: A Smoking Gun?

The lawsuit details a specific incident on May 7, 2022. On this date, Terraform Labs reportedly withdrew 150 million algorithmic stablecoins, TerraUSD (UST), from the Curve3pool without any public announcement. Crucially, just ten minutes later, wallets allegedly associated with Jane Street also withdrew 85 million UST from the very same liquidity pool.

Todd Snyder vehemently argues that the precise timing and details of Terraform Labs’ withdrawal were not disclosed to the public. He asserts this synchronized activity is “ironclad evidence” that Jane Street exploited insider knowledge to gain an unfair advantage in the market.

Connecting the Dots: Jump Trading and Information Leaks

This latest legal action is part of a broader offensive by Todd Snyder’s liquidation team. Late last year, the team initiated a substantial $4 billion claim lawsuit against Jump Trading and its executives, accusing them of artificially inflating the value of UST through “backdoor agreements.” The new complaint further implicates Jump Trading, alleging that some of Terraform Labs’ non-public confidential information was actually funneled to Jane Street via Jump Trading.

In a scathing indictment within the complaint, Todd Snyder states, “Jane Street abused market relationships to manipulate the market in one of the most impactful events in cryptocurrency history, tilting the scales in its own favor.” He has vowed that the liquidation team will pursue every available avenue to hold accountable those who harmed Terraform Labs’ creditors and reaped “enormous profits” from their positions.

Jane Street’s Vehement Denial and the Terra-Luna Aftermath

In response to these grave accusations, Jane Street has issued a strong denial. The firm maintains that the Terra-Luna collapse was solely the result of “billions of dollars in massive fraud” perpetrated by Terraform Labs’ management. Jane Street has pledged to “fully fight back” against what it describes as “opportunistic accusations.”

The 2022 Terra-Luna crisis began with UST’s de-pegging, which triggered a “death spiral” that saw the ecosystem’s native token, LUNA, plummet by over 99%. This catastrophic event obliterated more than $40 billion from the cryptocurrency market’s valuation and set off a devastating domino effect, leading to the bankruptcy of numerous cryptocurrency lending platforms.

In the wake of the collapse, Terraform Labs officially filed for bankruptcy in 2024 and subsequently agreed to pay a staggering $4.47 billion penalty to the U.S. Securities and Exchange Commission (SEC). Its founder, Do Kwon, was sentenced to 15 years in prison by a U.S. court in December last year, following his admission to two criminal charges.