TLDR
- Todd Snyder, overseeing Terraform Labs’ bankruptcy proceedings, has brought legal action against Jane Street over claims of insider trading during Terra’s 2022 implosion
- The trading firm allegedly leveraged confidential intelligence from Terraform sources to dump massive token holdings prior to public awareness of the crisis
- A Jane Street-associated wallet reportedly offloaded 85 million TerraUSD into a liquidity pool just 10 minutes after Terraform secretly removed 150 million TerraUSD from it
- This action allegedly initiated the catastrophic downward spiral that eliminated $40 billion in market capitalization
- Jane Street has rejected the accusations entirely, characterizing the lawsuit as “baseless” and “desperate”
The court-appointed administrator managing Terraform Labs’ bankruptcy has initiated legal proceedings against Jane Street, a prominent high-frequency trading operation, alleging the company exploited confidential information prior to the Terra network’s 2022 breakdown.
Todd Snyder submitted the complaint to Manhattan’s federal court this past Monday. Named as defendants are Jane Street’s co-founding partner Robert Granieri alongside staff members Bryce Pratt and Michael Huang.
The legal filing asserts that Jane Street obtained privileged, non-public intelligence via unofficial channels to Terraform personnel. The complaint accuses the trading house of leveraging this intelligence to liquidate substantial holdings with suspiciously precise timing.
Do Kwon and Daniel Shin established Terraform Labs in 2018. The organization developed the Terra blockchain alongside its algorithmic stablecoin TerraUSD, engineered to preserve parity with the United States dollar.
TerraUSD broke from its dollar peg in May 2022. Luna, its companion token, plummeted to virtually nothing in a matter of days. Approximately $40 billion in total market capitalization evaporated within a single week.
According to the complaint, the sequence of events initiated on May 7, 2022, when Terraform discreetly extracted 150 million TerraUSD from Curve3pool, a decentralized platform for stablecoin exchange, without making any public disclosure.
The 10-Minute Trade
Snyder’s filing indicates that merely 10 minutes following that extraction, a cryptocurrency wallet connected to Jane Street offloaded 85 million TerraUSD into the identical pool. The lawsuit identifies this transaction as Jane Street’s most substantial single exchange on record.
Snyder contends this transaction helped initiate a panic sell-off of TerraUSD that hastened the stablecoin’s demise. The legal document states Jane Street maintained trading activity based on privileged information throughout the token’s continued decline.
The relationship between Jane Street and Terraform dates to 2018, when Terraform brought the firm aboard for trading operations. Trading volume surged dramatically in 2022 following Bryce Pratt, a previous Terraform intern, reestablishing contact with former associates.
Pratt stands accused of establishing a confidential communication line with Terraform’s business development director, which the lawsuit characterizes as a “back-channel source for material non-public information.”
Do Kwon’s Involvement
On May 9, as TerraUSD continued declining, Pratt dispatched a group communication to Do Kwon and his associates proposing to purchase Bitcoin or Luna. Kwon’s reply mentioned Jump Trading’s co-founder Bill DiSomma and referenced the company’s capital-raising efforts.
Terraform filed bankruptcy protection in January 2024. Do Kwon faced subsequent arrest and entered guilty pleas to two fraud charges. He received a 15-year prison sentence in December 2024.
Snyder’s legal action seeks monetary damages, disgorgement of profits, and interest from Jane Street through jury trial proceedings.
Jane Street has categorically denied all accusations. A company spokesperson stated: “This desperate suit is a transparent attempt to extract money when it is well-established that the losses suffered by Terra and Luna holders were the result of a multibillion-dollar fraud perpetrated by the management of Terraform Labs.”
The litigation is proceeding in Manhattan’s federal court system.
