The court-appointed administrator for Terraform Labs has filed a lawsuit against trading firm Jane Street, alleging insider trading contributed to the downfall of the Terra ecosystem. The suit, filed in Manhattan federal court, accuses Jane Street, its co-founder Robert Granieri, and employees Bryce Pratt and Michael Huang of "misappropriating confidential information and manipulating market prices."
The complaint claims Jane Street obtained non-public information about Terraform and used it to sell off tokens tied to the Terra blockchain, thereby worsening its collapse. Terraform collapsed in May 2022 after its algorithmic stablecoin, TerraUSD, lost its dollar peg, wiping out an estimated $40 billion. Terraform filed for bankruptcy in 2024, and co-founder Do Kwon was later sentenced to 15 years in prison for fraud.
According to the lawsuit, Jane Street received information allowing them to sell off "hundreds of millions of dollars in potential exposure" just before the ecosystem's collapse. The suit alleges Jane Street, after reestablishing communication with Terraform insiders, used this as a "back-channel source for material non-public information." Specifically, the lawsuit claims Jane Street sold 85 million TerraUSD into a liquidity pool shortly after Terraform withdrew 150 million tokens without public announcement, an action that allegedly triggered a fire sale and contributed to the collapse. The administrator is seeking damages, disgorgement, and interest from Jane Street.