Jane Street has asked a U.S. court to dismiss a lawsuit filed by the bankruptcy estate of Terraform Labs. The trading firm denies claims that it helped trigger the 2022 collapse of the TerraUSD (UST) stablecoin and its sister token Luna, which erased roughly $40 billion in value.
In filings with the Southern District of New York, Jane Street stated the case is an attempt to shift blame for the Terra ecosystem's failure. The firm urged the court to dismiss the complaint, arguing that the core issues have already been settled in criminal and civil cases against Terraform founder Do Kwon. Kwon pleaded guilty to fraud and stated he was "alone responsible for everyone’s pain."
Terraform’s lawsuit, filed in January, accuses Jane Street of insider trading. It alleges the firm used nonpublic information from Terraform insiders to trade ahead of major market moves, including large withdrawals that preceded UST losing its dollar peg. Jane Street disputes this narrative and denies any role in the collapse, maintaining that Terraform’s "fraud scheme" did not involve them.
Terraform Labs, founded in 2018, filed for bankruptcy in January 2024. The downfall rippled across the crypto sector. The court’s decision on Jane Street’s motion could significantly shape how responsibility for the collapse is assigned.