TLDR
- Jane Street filed to dismiss Terraform Labs’ insider trading lawsuit in Manhattan federal court
- Jane Street says the suit tries to shift blame for a fraud Terraform itself committed
- Terraform’s founder Do Kwon already pleaded guilty to conspiracy and wire fraud, sentenced to 15 years
- Jane Street argues its largest trades happened after key information was already public
- Jane Street is asking for dismissal with prejudice, blocking Terraform from refiling
Trading firm Jane Street has asked a Manhattan federal court to throw out a lawsuit filed by the bankruptcy estate of Terraform Labs. The suit accused Jane Street of insider trading that made the 2022 collapse of the Terra ecosystem worse.
🚨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
Terraform’s court-appointed administrator, Todd Snyder, filed the lawsuit in February. It named Jane Street, co-founder Robert Granieri, and employees Bryce Pratt and Michael Huang. They were accused of trading Terra tokens using nonpublic information from insiders at Terraform.
Jane Street pushed back hard in its motion to dismiss. The firm called the lawsuit an attempt “to extract cash from Jane Street to foot the bill for a fraud that Terraform itself perpetrated on the market.”
The Terra ecosystem collapsed in May 2022. Its algorithmic stablecoin, TerraUSD, lost its dollar peg rapidly. That caused the LUNA token to crash, wiping out around $40 billion in value.
The Fraud Was Already Prosecuted
Jane Street’s main argument is that the underlying fraud has already been handled by the courts. Terraform founder Do Kwon pleaded guilty to conspiracy and wire fraud in December. He is now serving a 15-year prison sentence.
A jury also found Terraform and Kwon civilly liable for securities fraud. Kwon himself admitted he was “alone responsible for everyone’s pain,” according to the filing.
Jane Street says it had no involvement in Terraform’s fraud scheme and that relitigating the cause of the collapse through this lawsuit is improper.
The firm also cited the “Wagoner rule,” a legal principle that stops a bankruptcy estate from suing a third party to recover losses caused by its own fraud.
Insider Trading Claims Called “Self-Defeating”
Jane Street also challenged the insider trading claims directly. It pointed out that its largest TerraUSD sale happened 10 minutes after the supposedly nonpublic information became visible to the market.
The filing states Terraform accused Jane Street of gaining an edge through “back-channel communications” about the timing of a liquidity pool transition. But Jane Street says Terraform could not identify a single specific communication, even after extensive pre-suit discovery.
Jane Street also noted that the liquidity pool transition had been publicly announced weeks before any trading took place, and that there was no market reaction to that announcement at the time.
The firm began building a short position on May 8, 2022, and sold assets on May 7. It argues Terraform has not identified any information that was both material and nonpublic at those times.
Jane Street also raised a jurisdictional issue, saying Terraform failed to prove the trades in question took place in the United States.
The firm is asking the court to dismiss the case with prejudice, which would prevent Terraform’s estate from bringing the same claims again.
