The bankruptcy administrator of Terraform Labs filed a lawsuit against Jane Street in a Manhattan federal court. The accusation: the quantitative trading firm used non-public information to front-run the $40 billion collapse of TerraUSD in May 2022.
Todd Snyder, the court-appointed administrator of the Terraform bankruptcy estate, filed the complaint on February 23, 2026. It was submitted at the US District Court for the Southern District of New York. In addition to Jane Street Group LLC, the complaint names three individuals: co-founder Robert Granieri and employees Bryce Pratt and Michael Huang.
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Ten minutes, $85 million
At the center of the allegations is a specific event on May 7, 2022. At 5:44 PM Eastern Time, Terraform Labs withdrew 150 million TerraUSD (UST) from the Curve 3pool. Less than ten minutes later, a wallet linked to Jane Street removed 85 million UST from the same liquidity pool.
According to the complaint, Jane Street used an internal chat channel called "Bryce's Secret" for non-public information. Two days later, on May 9, 2022, employee Bryce Pratt initiated a group message with Do Kwon and other Jane Street staff. Discussion revolved around bids on Bitcoin or Luna tokens. By that point, UST had already lost its dollar peg and was trading at 35 cents.
"Jane Street used non-public information for front-running trades that accelerated Terraform's collapse. The misuse of this information allowed Jane Street to unwind hundreds of millions of dollars in potential exposure at precisely the right moment." - Todd Snyder in the complaint
On-chain analysis supports the allegations. Researcher Igor Igamberdiev of Wintermute identified Jane Street as the likely owner of the notorious "Wallet A." This wallet swapped 85 million UST for USDC, destabilizing the Curve Pool. A Coinbase wallet received 84.5 million USDC from "Wallet A" immediately afterward. Separate credit flows also suggest a connection: Jane Street borrowed 25 million USDC from BlockTower via Clearpool on May 3, 2022. Within two weeks of Terra's collapse, a linked address repaid the loan, plus an extra $10 million.
Jane Street rejects the allegations
Jane Street responded sharply to the lawsuit. A spokesperson called it "desperate" and a "transparent attempt to extort money." In response, the trading firm announced it would vigorously defend against the claims. According to Jane Street, the losses suffered by Terra and Luna holders were the result of a multi-billion-dollar fraud committed by Terraform Labs management.
Notably, the complaint was filed in redacted form. Unlike the parallel lawsuit against Jump Trading, it does not specify a damages amount. Financial details remain under seal for now.
Jane Street has been trading cryptocurrencies since late 2017 and launched the JCX platform for 24/7 crypto trading in 2018. In May 2023, the firm withdrew from US crypto trading alongside Jump Trading. Still, Jane Street retained crypto holdings, including an investment in Kraken's $500 million funding round and positions in Bitcoin mining companies.
Second lawsuit after Jump Trading
The lawsuit against Jane Street follows a pattern. Back in December 2025, the same administrator Todd Snyder sued trading firm Jump Trading in a Chicago federal court, seeking $4 billion in damages. Allegations there are the same: market manipulation, secret deals, and self-enrichment.
Accusations against Jump Trading are even more severe. The firm allegedly propped up the UST peg in secret as early as May 2021. At the same time, it publicly claimed the algorithm was working flawlessly. Jump received Luna tokens at a discount price of $0.40 per token. Subsequently, the market price rose to $110. During the collapse, the Luna Foundation Guard transferred roughly 50,000 Bitcoin to Jump Trading, with no written agreement.
Jump Trading also rejected the allegations and called the lawsuit a "desperate attempt by Terraform Labs to shift blame and financial responsibility away from the crimes that Do Kwon committed." Both trading firms are using nearly identical defense strategies.
Terraform's long downfall
The collapse of Terra and Luna in May 2022 wiped out roughly $40 billion in market capitalization within a single week. As recently as January 2022, UST was the third-largest stablecoin with a market capitalization of $10 billion. LUNA hit an all-time high of $120 in April 2022. Two months earlier, Terraform Labs had raised $88 million in a Series B round.
This collapse triggered a chain reaction. Three Arrows Capital, Voyager Digital, and ultimately FTX failed in the months that followed. Terraform founder Do Kwon fled and was arrested in Montenegro in March 2023. In August 2024, he pleaded guilty to two counts: conspiracy to commit fraud and wire fraud. Judge Paul A. Engelmayer sentenced him to 15 years in prison on December 11, 2025.
"In the history of federal criminal prosecution, few frauds have caused as much harm as yours, Mr. Kwon." - U.S. District Judge Paul A. Engelmayer
Terraform Labs filed for bankruptcy in January 2024. Its SEC settlement amounted to $4.55 billion. Kwon held 92 percent of Terraform Labs. In total, administrator Snyder has recovered roughly $300 million for creditors so far. Since March 2025, affected UST and Luna holders can submit their loss claims through a claims portal.
Manhattan federal prosecutors had previously examined Telegram communications between Jump Trading, Jane Street, and Alameda Research. Their investigation concerned a potential TerraUSD rescue and possible market manipulation. Building on these findings, the current civil lawsuit connects directly to those existing investigations.
