Jane Street Seeks Dismissal of Terraform Insider Trading Lawsuit

Zach Anderson Apr 24, 2026 05:33

Jane Street moves to dismiss Terraform's insider trading lawsuit, arguing trades were based on public signals during Terra's $40 billion collapse.

Quantitative trading giant Jane Street has filed a motion to dismiss a lawsuit brought by Terraform Labs' court-appointed administrator, accusing the firm of insider trading during the catastrophic collapse of the Terra ecosystem in May 2022. Jane Street maintains that its trades were based on public market signals, not inside information, and described Terraform's claims as an attempt to "extract cash" to cover losses from its own fraud.

The lawsuit, initiated in February 2026 by Terraform administrator Todd Snyder, alleges that Jane Street, along with co-founder Robert Granieri and two employees, traded Terra tokens using nonpublic information provided via "back-channel communications." Jane Street, however, disputes this, arguing that the timing of its trades aligns with publicly visible market indicators and that Terraform has failed to provide evidence of any improper communication.

"Terraform’s fraud scheme — in which Jane Street had no involvement — has already been prosecuted, adjudicated, and punished," Jane Street stated in its motion filed in a Manhattan federal court. Terraform’s role in the ecosystem's collapse has indeed been under heavy scrutiny; its founder, Do Kwon, pleaded guilty to conspiracy and wire fraud charges in December 2025, receiving a 15-year prison sentence.

The lawsuit centers on the events leading to the $40 billion implosion of TerraUSD (UST) and its sister token, LUNA. Terraform's algorithmic stablecoin lost its U.S. dollar peg in May 2022, triggering a death spiral that wiped out the value of LUNA and reverberated across the crypto market. Jane Street argues that its decision to sell Terra-linked tokens was a rational response to "public signs of that collapse" rather than any illicit advantage.

The trading firm also pointed out inconsistencies in Terraform's accusations. For example, Terraform’s own complaint allegedly acknowledges that one of Jane Street's largest TerraUSD sales occurred 10 minutes after critical information became public. "Plaintiff pleads 'on information and belief' that Jane Street learned the timing of Terraform’s transition to a new liquidity pool through 'back-channel communications,' yet cannot identify a single communication disclosing that timing," the motion added.

Following the collapse, Terraform Labs filed for bankruptcy in January 2024, later receiving U.S. court approval to wind down its operations. Meanwhile, Jane Street, typically known for its prowess in global financial markets, has found itself facing allegations of market manipulation in both traditional and crypto markets in recent years.

The legal battle comes at a time when the remnants of the Terra project hold limited significance in the broader crypto market. As of April 24, 2026, the LUNA token trades at just $0.05802, down 1.09% over 24 hours, with a market cap of $41.19 million—far removed from its multibillion-dollar heyday.

Jane Street has asked the court to dismiss the lawsuit with prejudice, which would prevent Terraform from bringing the same claims again. Whether the court will entertain Terraform’s allegations or side with Jane Street remains to be seen, but the case underscores the lingering legal aftermath of one of crypto’s most infamous collapses.

• terraform labs
• jane street
• legal
• insider trading
• ust collapse