Emre Yumlu 
A new legal battle has emerged from the ashes of the 2022 Terra ecosystem collapse. The administrator overseeing the wind-down of Terraform Labs, Todd Snyder, has filed a lawsuit against high-frequency trading firm Jane Street, accusing the company of insider trading that allegedly accelerated the project’s downfall. The suit also names Jane Street co-founder Robert Granieri, along with employees Bryce Pratt and Michael Huang.
According to the complaint, Jane Street used material nonpublic information related to Terraform’s internal operations to gain an unfair trading advantage in TerraUSD (UST) and Luna markets during a critical period.
Claims of Front-Running and Market Advantage
The lawsuit alleges that Jane Street obtained sensitive, price-moving information from individuals connected to Terraform Labs before it became public. Armed with this knowledge, the firm is accused of engaging in “front-running” — placing trades ahead of anticipated large market moves to secure profits.
Snyder argues that Jane Street leveraged its market relationships to position itself advantageously during one of the most consequential events in crypto history. On behalf of affected creditors, the wind-down team has stated it intends to pursue all legal remedies available.
Jane Street has firmly denied the allegations, characterizing the lawsuit as opportunistic and without merit. The firm has indicated it will vigorously defend itself against the claims.
The Events That Triggered the Collapse
The chain of events dates back to May 7, 2022, when Terraform Labs quietly withdrew 150 million TerraUSD from the Curve3pool liquidity platform. The lawsuit claims that roughly 10 minutes before any public disclosure, a wallet allegedly linked to Jane Street withdrew 85 million UST from the same pool.
The withdrawals contributed to market instability. The following day, Terraform founder Do Kwon stated that the transaction was intended to move liquidity to a new stablecoin pool. However, confidence in TerraUSD quickly eroded.
By May 9, UST had begun losing its 1:1 dollar peg, and the Luna token rapidly collapsed. Within a week, approximately $40 billion in market value was wiped out, triggering widespread losses and impacting multiple crypto firms exposed to the ecosystem.
Aftermath and Ongoing Legal Scrutiny
Founded in 2018 in Singapore by Do Kwon and Daniel Shin, Terraform Labs was best known for the Terra blockchain, Luna token, and algorithmic stablecoin TerraUSD. The company filed for bankruptcy in January 2024, and a wind-down trust assumed control later that year.
In August, Do Kwon pleaded guilty to two criminal charges and received a 15-year prison sentence.
The lawsuit against Jane Street reopens debate over accountability in the Terra collapse. While the outcome remains uncertain, the case may have broader implications for insider trading enforcement and market conduct standards within the crypto industry.
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