Terraform Targets Jane Street in TerraUSD Insider Trade Claim
- Terraform’s plan administrator alleges Jane Street used non-public TerraUSD data.
- The suit points out a Curve3pool withdrawal sequence during the May 7, 2022 depeg.
- Jane Street rejects the claims and is still waiting for a formal court response.
Terraform Labs’ bankruptcy administrator has sued Jane Street in U.S. federal court, alleging the trading firm used non-public information to profit during the 2022 TerraUSD collapse. The complaint claims Jane Street accessed internal liquidity decisions and positioned trades as TerraUSD lost its dollar peg, according to The Wall Street Journal. The case adds to ongoing legal fallout from the Terra ecosystem’s $40 billion wipeout.
Todd Snyder, the court-appointed plan administrator for Terraform, accused Jane Street of exploiting confidential communications during a crisis. “Jane Street abused market relationships to rig the market in its favor during one of the most consequential events in crypto history,” Snyder told The Wall Street Journal.
Jane Street denied the claims. A company spokesperson described the lawsuit as a “desperate attempt to extract money,” according to statements cited by the publication. The firm has not yet filed a formal court response.
Alleged Use of Non-Public Information
According to the complaint cited by The Wall Street Journal, Jane Street gained advance insight into Terraform’s internal liquidity plans as TerraUSD began to lose its peg in May 2022. The lawsuit claims the firm used that knowledge to structure profitable trades.
The complaint points to Bryce Pratt, a Jane Street employee and former Terraform Labs member, as a key link. Snyder alleges Pratt maintained communication lines with former colleagues at Terraform, including a software engineer and the head of business development.
Those conversations allegedly occurred in a private chat group. Snyder claims the channel transmitted Terraform-related information to Jane Street during a period of extreme market stress.
In one instance, the complaint describes a withdrawal of 150 million TerraUSD from the Curve3pool on May 7, 2022. Terraform did not announce the move publicly. Within ten minutes, a wallet allegedly tied to Jane Street withdrew an additional 85 million TerraUSD from the same pool. The lawsuit states that the timing and details of these withdrawals were not disclosed to the public.
Broader Legal Fallout From Terra’s Collapse
Terraform Labs, led by founder Do Kwon, collapsed in 2022 after its algorithmic stablecoin TerraUSD entered a death spiral alongside its sister token Luna. The crash erased more than $40 billion in market value and triggered bankruptcies across the crypto lending sector.
After failed revival efforts, Terraform filed for bankruptcy in 2024. Following that filing, the company agreed to pay the U.S. Securities and Exchange Commission $4.47 billion in penalties.
Meanwhile, legal action expanded beyond Jane Street. In late December, Terraform’s administrator filed a separate lawsuit against Jump Trading in U.S. federal court. That complaint accused the firm of unlawfully profiting from and materially contributing to the Terra ecosystem’s collapse.
Last December, Do Kwon received a 15-year prison sentence in the United States after pleading guilty in August to two criminal counts. His conviction marked a major milestone in the government’s response to the Terra collapse.
Related: Terraform Labs Launches Claims Portal for Crypto Losses
A Test of Insider Trading Theory in Crypto
Legal observers say the Jane Street case could test the boundaries of insider trading law in digital asset markets. The complaint relies on a stricter misappropriation theory, which does not require a traditional corporate insider relationship.
Under that approach, liability may arise if a market participant obtains confidential information from a protocol team and trades against the broader market. Rossow, cited in the report, said the theory could expand who qualifies as an insider in crypto cases.
“It suggests that in crypto, an ‘insider’ isn’t just an executive; it’s anyone with a private line to the ‘war room’ of a protocol during a crisis,” Rossow said.
The case will likely hinge on materiality and the source of the information, Rossow added. Analysts now watch how courts interpret communication channels between decentralized finance protocols and market makers.
