TLDR
- Trading firm Jane Street has requested dismissal of insider trading allegations brought by Terraform Labs’ bankruptcy estate
- The firm contends Terraform is attempting to deflect responsibility for its own fraudulent activities
- Do Kwon, Terraform’s co-founder, has admitted guilt to conspiracy and wire fraud charges, receiving a 15-year prison term
- Jane Street maintains its most significant transactions occurred after critical details were publicly available
- The firm seeks dismissal with prejudice to permanently bar Terraform from pursuing these claims again
In a Manhattan federal courthouse, prominent trading firm Jane Street has moved to dismiss allegations filed by Terraform Labs’ bankruptcy estate. The complaint accused the company of engaging in insider trading that allegedly exacerbated the catastrophic 2022 Terra ecosystem meltdown.
🚨LATEST: Jane Street has filed to DISMISS Terraform Labs’ insider trading lawsuit over the UST/LUNA collapse.
Case so far:
1. Terraform sued Jane Street, blaming it for the collapse via insider trading and market manipulation
2. Jane Street says its largest trades occurred… pic.twitter.com/Mj60RkgGvf
— Coin Bureau (@coinbureau) April 24, 2026
Todd Snyder, the court-designated administrator overseeing Terraform’s bankruptcy proceedings, initiated the legal action this past February. The lawsuit targeted Jane Street along with its co-founder Robert Granieri and staff members Bryce Pratt and Michael Huang. The complaint alleged these parties executed trades involving Terra tokens while possessing confidential information obtained from Terraform insiders.
In its dismissal motion, Jane Street mounted an aggressive defense. The company characterized the legal action as a scheme “to extract cash from Jane Street to foot the bill for a fraud that Terraform itself perpetrated on the market.”
The Terra network experienced a dramatic implosion in May 2022. TerraUSD, its algorithmic stablecoin, rapidly lost its one-dollar peg. This triggered a devastating crash in the LUNA token, erasing approximately $40 billion in market capitalization.
Prior Legal Proceedings Already Addressed the Fraud
Jane Street’s central defense rests on the assertion that judicial authorities have already addressed the underlying fraudulent conduct. Do Kwon, who founded Terraform, entered a guilty plea for conspiracy and wire fraud charges this past December. He is currently incarcerated, serving out his 15-year sentence.
Additionally, a jury determined that both Terraform and Kwon bore civil responsibility for securities fraud violations. Kwon personally acknowledged being “alone responsible for everyone’s pain,” the court documents reveal.
Jane Street asserts it played no role whatsoever in Terraform’s fraudulent operations and that reopening questions about what caused the collapse through this litigation is legally inappropriate.
The company also invoked the “Wagoner rule,” an established legal doctrine that prevents a bankruptcy estate from pursuing third-party defendants to recoup damages stemming from its own fraudulent conduct.
Insider Trading Allegations Labeled “Self-Defeating”
Jane Street directly contested the insider trading accusations as well. The firm highlighted that its most substantial TerraUSD transaction took place just 10 minutes following the moment when the purportedly confidential information became accessible to market participants.
Court documents reveal that Terraform alleged Jane Street obtained advantages through “back-channel communications” regarding when a liquidity pool transition would occur. However, Jane Street maintains that Terraform couldn’t pinpoint even one particular communication, despite conducting comprehensive pre-litigation discovery.
Jane Street further emphasized that the liquidity pool transition had been disclosed to the public several weeks prior to any trading activity, and that this announcement generated no discernible market response when it was made.
The company initiated a short position on May 8, 2022, and liquidated holdings on May 7. Jane Street contends that Terraform has failed to identify any information during those timeframes that was simultaneously material and confidential.
Jane Street additionally presented a jurisdictional challenge, asserting that Terraform neglected to demonstrate the contested trades were executed within United States territory.
The firm requests the court grant dismissal with prejudice, a ruling that would permanently prohibit Terraform’s bankruptcy estate from pursuing identical allegations in future litigation.
