Terraform claims Jane Street behind $40B meltdown

Terraform Labs and its bankruptcy administrator have accused trading firm Jane Street of using insider information to front-run transactions and make a profit from the platform’s $40 billion crash.

Todd Snyder, the court-appointed administrator winding down Terraform Labs, reportedly filed the lawsuit against Jane Street, its co-founder Robert Granieri, and its two employees, Bryce Pratt and Michael Huang, in a Manhattan federal court on Monday.

The heavily redacted filing claims that Pratt, a former Terraform intern, was tasked with reestablishing communication with old Terraform employees. 

He set up a group chat called “Bryce’s secret” with various Terrform employees and higher-ups, where he learned insider information and relayed it back to Jane Street, the suit says.

One discussion about an investment in Terraform Labs was allegedly used to make profitable trades based on material nonpublic information. According to the suit, one such trade involved Terraform Labs privately withdrawing 150 million TerraUSD from liquidity pool Curve3pool in May 2022.

A wallet linked to Jane Street withdrew 85 million TerraUSD from the same liquidity pool 10 minutes later, the suit notes.

Read more: How did so many Jane Street traders wind up at FTX?

Synder told the WSJ that “Jane Street abused market relationships to rig the market in its favor” during Terraform’s collapse, and that he’s seeking restitution from “those who exploited their position and reaped substantial profits at the expense of Terraform Labs’ creditors.”

Jane Street, however, says the suit is filled with “baseless, opportunistic claims.” 

It said, “This desperate suit is a transparent attempt to extract money when it’s well-established that the losses suffered by Terra and Luna holders were the result of a multibillion-dollar fraud perpetrated by the management of Terraform Labs.”

Jane Street scrutinized for Terraform’s collapse

Terraform Labs’ crypto enterprise collapsed in May 2022 after its stablecoin TERRA depegged from the dollar. Its sister token LUNA crashed days later.

The incident wiped $40 billion from the crypto market, and the firm’s CEO, Do Kwon, was subsequently sentenced to 15 years in prison for wire fraud and conspiracy to defraud.

Jane Street is a multi-billion-dollar Wall Street quantitative trading firm that traded with Terraform Labs. 

In 2023, federal prosecutors were reportedly probing Telegram messages from various Jane Street and Jump Trading employees to determine if the firms committed any market manipulation that led to Terra’s collapse. 

Read more: How Jump Trading allegedly manipulated UST into collapse

Synder also launched a lawsuit against Jump Trading in December 2025 that claimed the firm made billions of dollars from a series of secret deals with Terraform while lying about the stablecoin’s capabilities.

Wintermute’s head of research, Igor Igamberdiev, claimed in 2023 that there’s a good chance that the wallet behind the 85 million TerraUSD withdrawal is linked to Jane Street and a Coinbase deposit he discovered.

This transaction is considered a major contributor to Terraform’s collapse. 

The memory of the collapse is still raw, with many unwilling to let it lie. Indeed, Zerohedge, a financial news blog criticized for its pro-Russian coverage, has suggested by way of revenge that a “big crypto syndicate” should force a short squeeze on Jane Street’s trading pairs, “wiping them out overnight.”

Multiple big names at FTX had originally worked for Jane Street prior to the creation of FTX, including Sam-Bankman-Fried and Caroline Ellison. After Terra’s collapse, these two, along with three more former Jane Street traders. would go on to cause the destruction of FTX.

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