The administrator overseeing the liquidation of Terraform Labs has filed a high-profile lawsuit against Jane Street, accusing the elite quantitative trading firm of exploiting confidential information to execute advantageous trades that allegedly intensified the 2022 collapse of the Terra ecosystem.
Todd Snyder, the court-appointed plan administrator winding down the bankrupt Singapore-based company founded by Do Kwon, submitted the complaint Monday in Manhattan federal court.
The action names Jane Street Group LLC, co-founder Robert Granieri, and employees Bryce Pratt (a former Terraform Labs staffer) and Michael Huang as defendants.
It seeks damages, disgorgement of profits, and interest on behalf of creditors still recovering from the disaster.
At the core of the allegations is the claim that Jane Street secured material non-public details about Terraform’s internal moves through insider channels.
This allowed the firm to anticipate major liquidity shifts and position itself ahead of the market, according to the filing.
Rather than simply observing events, the traders allegedly used this edge to reduce their own exposures at the optimal moment, while their actions contributed to the accelerating panic that doomed the project.
A key example occurred on May 7, 2022.
Terraform Labs quietly withdrew roughly $150 million in TerraUSD (UST) from the Curve Finance 3pool, a critical decentralized liquidity hub for the stablecoin.
Within about 10 minutes—well before any public notice—a wallet connected to Jane Street pulled $85 million in UST from the exact same pool.
The suit contends this rapid follow-on move helped spark selling pressure that undermined confidence and triggered UST’s break from its dollar peg.
Further communications cited in the complaint include a May 9 message from Pratt to Do Kwon offering to purchase Bitcoin or Luna as the depegging worsened.
By leveraging these insights, Jane Street purportedly unwound hundreds of millions of dollars in potential liabilities mere hours before the full-scale implosion.
The Terra meltdown erased more than $40 billion in market value within days. UST, once promoted as an algorithmic stablecoin, lost its $1 anchor and crashed, while its sister token Luna plunged toward zero.
The chaos rippled outward, fueling the failures of hedge funds like Three Arrows Capital, lenders such as Voyager Digital, and eventually FTX.
Terraform Labs itself filed for bankruptcy in 2024, and Snyder continues pursuing recoveries for harmed parties.
Snyder stated that Jane Street “abused market relationships to rig the market in its favor during one of the most consequential events in crypto history.”
He added that his office “will pursue all avenues supported by the facts and the law against those who exploited their position and reaped substantial profits at the expense of Terraform Labs’ creditors.”
Jane Street rejected the claims outright.
A spokesperson called the lawsuit “a desperate suit” and “a transparent attempt to extract money,” arguing 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 firm pledged to defend itself “vigorously against these baseless, opportunistic claims.”
The case arrives amid ongoing fallout from the 2022 crisis. Do Kwon pleaded guilty to fraud charges tied to misleading statements about UST’s stability mechanisms and received a lengthy prison sentence.
Snyder has also sued Jump Trading for $4 billion over alleged manipulation.
Earlier federal probes examined chats among traders at Jane Street, Jump, and Alameda Research concerning possible UST rescue efforts.
This latest suit underscores lingering questions about information flows, market-making practices, and accountability in crypto’s most volatile moments.
As the redacted complaint proceeds toward potential discovery and trial, it may offer new insights into the precise mechanics that turned a localized depeg into one of digital finance’s costliest catastrophes.