Key Takeaways
- A lawsuit filed by Terraform Labs’ bankruptcy administrator Todd Snyder targets trading powerhouse Jane Street for purported insider trading during Terra’s 2022 implosion
- The complaint alleges Jane Street leveraged confidential intelligence from Terraform sources to liquidate massive token positions ahead of public knowledge
- Court documents reveal a Jane Street-associated wallet dumped 85 million TerraUSD into Curve3pool just 10 minutes after Terraform secretly removed 150 million TerraUSD from the same platform
- Snyder’s complaint argues this transaction ignited the catastrophic downward spiral that obliterated $40 billion in cryptocurrency market capitalization
- Jane Street has categorically rejected the allegations, characterizing the lawsuit as “baseless” and a “desperate” cash grab
A court-appointed bankruptcy administrator for Terraform Labs has initiated legal action against prominent high-frequency trading operation Jane Street, alleging the firm exploited confidential intelligence to execute strategic trades before the Terra ecosystem’s spectacular 2022 failure.
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 contends that Jane Street obtained privileged, non-public data through covert communications with individuals inside Terraform. The complaint charges that this intelligence enabled the firm to liquidate substantial holdings with remarkably precise timing.
Do Kwon and Daniel Shin established Terraform Labs in 2018. The enterprise developed the Terra blockchain alongside its algorithmic stablecoin TerraUSD, engineered to preserve a fixed 1:1 ratio against the United States dollar.
TerraUSD’s dollar peg collapsed in May 2022. The Luna cryptocurrency plummeted to essentially worthless levels in mere days. Approximately $40 billion in total market capitalization evaporated in less than seven days.
According to the complaint, the sequence of catastrophic events initiated on May 7, 2022, when Terraform secretly extracted 150 million TerraUSD from Curve3pool, a decentralized platform for stablecoin exchange, without making any public disclosure.
The Critical 10-Minute Window
Snyder’s filing states that within a mere 10-minute window following that extraction, a cryptocurrency wallet connected to Jane Street dumped 85 million TerraUSD into the identical pool. The legal documents characterize this as Jane Street’s largest single transaction of its kind.
The administrator contends this massive sale helped initiate a panic-driven selloff of TerraUSD that hastened the stablecoin’s ultimate failure. The lawsuit further alleges Jane Street persistently traded using privileged information throughout the token’s subsequent decline.
The relationship between Jane Street and Terraform originated in 2018, when Terraform brought the trading firm aboard as a partner. Trading volume surged dramatically in 2022 following Bryce Pratt’s reunion with former colleagues—Pratt had previously worked at Terraform as an intern.
The lawsuit accuses Pratt of establishing a confidential communication pathway with Terraform’s business development executive, characterized in the complaint as a “back-channel source for material non-public information.”
Do Kwon’s Role in the Saga
On May 9, as TerraUSD’s value deteriorated, Pratt transmitted a group communication to Do Kwon and his colleagues proposing to purchase Bitcoin or Luna. Kwon’s reply mentioned Jump Trading’s co-founding partner Bill DiSomma and referenced the company’s capital-raising efforts.
Terraform initiated bankruptcy proceedings in January 2024. Do Kwon subsequently faced arrest and entered guilty pleas to two fraud charges. A court imposed a 15-year prison sentence in December 2024.
Snyder’s lawsuit demands monetary damages, return of profits, and accumulated interest from Jane Street through a jury trial.
Jane Street has rejected every allegation. A company representative 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.”
Manhattan federal court has jurisdiction over the proceedings.
