Jane Street sued over alleged $134M insider trading in Terra collapse

Terraform Labs’ liquidators have accused Jane Street of insider trading that allegedly netted $134 million during the May 2022 Terra/LUNA implosion, claiming the trading giant front‑ran the depeg using non‑public information while retail investors were wiped out.

Summary

• The court-appointed administrator says Jane Street used confidential data and private Telegram coordination to dump UST ahead of the collapse.
• The lawsuit alleges roughly $134 million in illicit profit from trades executed during a “death spiral” that erased around $40 billion in market value.
• Jane Street has moved to dismiss the case, calling the complaint “self‑defeating” and a “desperate effort” to shift blame for Terraform’s fraud.

The administrator winding down Do Kwon’s Terraform Labs has filed a federal lawsuit accusing Jane Street, its co‑founder Robert Granieri, and traders Bryce Pratt and Michael Huang of insider trading tied to the May 2022 Terra collapse.

Terraform liquidator targets Jane Street over May 2022 trades

According to the complaint, filed in the Southern District of New York and reviewed by the Financial Times, Jane Street “used material, non‑public information obtained from Terraform insiders to front‑run market‑moving events” and exit positions while ordinary investors were left holding collapsing UST and LUNA.

The complaint alleges that Jane Street coordinated its UST trades “through a private Telegram chat” and executed an “85 million UST” sale on May 7, 2022, minutes after confidential instructions were given to withdraw liquidity from a key pool. Terraform’s plan administrator claims those trades formed part of a broader scheme that generated “approximately $134 million in unlawful profits” as Terra’s algorithmic stablecoin lost its peg and the ecosystem unraveled in a matter of days.

In detailing the fallout, the lawsuit places Jane Street’s trading squarely inside one of crypto’s most destructive episodes, describing Terra’s failure as a “$40 billion collapse” that triggered cascading liquidations and contributed to a wider credit crunch across digital asset markets. Crypto.news has previously reported on the long legal afterlife of that implosion, including civil and criminal actions targeting Terraform, Do Kwon and other actors that helped reshape the regulatory conversation around so‑called algorithmic stablecoins.

Jane Street hits back, calls complaint ‘self‑defeating’

Jane Street has categorically denied the allegations and asked a Manhattan court to throw out the case with prejudice. In its motion to dismiss, the firm argues that the administrator “does not identify any material, nonpublic information Jane Street supposedly received” and that the complaint “concedes Jane Street’s single largest UST sale occurred ten minutes after the supposed material non‑public information was visible to the market,” making it “self‑defeating on its own terms.”

The trading firm also frames the lawsuit as an attempt to plug Terra’s hole with someone else’s balance sheet.

“This lawsuit is a desperate effort to pursue funds where none are owed,” a Jane Street spokesperson said, adding that “losses suffered by LUNA and UST holders were the direct result of the multibillion‑dollar fraud perpetrated by Terraform Labs’ leadership, not the actions of Jane Street.”

Coverage in the Wall Street Journal notes that the plaintiff is seeking to claw back the alleged $134 million plus additional damages from Jane Street and its executives, arguing that their trades “hastened the downfall” of Terraform by draining liquidity and accelerating panic. In a separate analysis, DL News reported that Jane Street told the court it simply “sold a deteriorating investment” as public signs of Terra’s failure mounted, insisting that sophisticated firms and retail traders were reacting to the same information as the peg broke.

The case now sits at the intersection of market‑structure reality and post‑crash scapegoating: a high‑frequency trading firm that profited by moving fast, and a liquidator trying to reframe that speed as illicit access to inside information. Whatever the outcome, the lawsuit ensures that the forensic fight over who really accelerated Terra’s $40 billion destruction—Terraform itself, Jane Street, or a combination of both—will play out in open court rather than just in crypto’s collective memory.