Jane Street has asked a US court to dismiss a lawsuit filed by Terraform Labs’ bankruptcy estate, rejecting allegations that the trading company helped trigger the 2022 collapse of stablecoin TerraUSD (UST) and its sister token Luna.
In two filings submitted Thursday to the Southern District of New York, Jane Street and several employees said the case was an attempt to shift blame for the failure of the Terra ecosystem, which wiped out about $40 billion in value in a matter of days.
The company urged the court to dismiss the complaint with prejudice, which would prevent Terraform from pursuing the same claims.
“This case is an attempt by the Terraform Labs estate to extract money from Jane Street to foot the bill for a fraud that Terraform itself perpetrated on the marketplace,” the defendants wrote.
Jane Street argued that the fundamental issues behind Terra’s collapse had already been settled in court. He discussed criminal and civil charges against Terraform founder Do Kwon, who pleaded guilty to conspiracy and wire fraud and is serving a 15-year prison sentence. A jury also found Kwon and Terraform liable for securities fraud. According to the filing, Kwon said he was “solely responsible for everyone’s pain.”
Terraform’s lawsuit, filed in January by administrator Todd Snyder, accuses Jane Street of insider trading that accelerated the collapse. Snyder alleges that the company used non-public information from Terraform insiders to trade ahead of major moves, including large withdrawals from the Curve liquidity pool that preceded UST’s loss of its dollar peg.
For example, the complaint claims that Terraform withdrew 150 million UST on May 7, 2022 and a wallet linked to Jane Street withdrew 85 million UST minutes later, triggering market panic. Jane Street disputes this account and denies any role in the collapse.
Jane Street claims that “Terraform’s fraudulent scheme – in which Jane Street has no involvement – has already been prosecuted, tried and punished.”
Terraform Labs, founded in 2018, filed for bankruptcy in January 2024. Its downfall reverberated across the crypto industry, contributing to the bankruptcies of several companies exposed to the project. The court’s decision on Jane Street’s motion could determine how responsibility for the collapse will be assigned.
