The bankruptcy administrator for Terraform Labs has sued financial firm Jane Street, alleging insider trading related to the 2022 Terra ecosystem crash. The lawsuit claims Jane Street accessed non-public information from Terraform insiders to execute trades before TerraUSD lost its dollar peg.
This depegging event in May 2022 caused billions in market value losses and a LUNA price collapse. The administrator contends that Jane Street’s trading activities occurred before significant liquidity changes were publicly disclosed.
Specifically, the suit highlights a withdrawal of approximately 150 million TerraUSD from a Curve pool shortly before the depegging. Court filings state an account linked to Jane Street withdrew about 85 million TerraUSD soon after an internal transaction, suggesting prior knowledge of Terraform’s liquidity management.
The administrator seeks compensation and damages, while Jane Street denies the allegations and vows a vigorous defense.
This legal action follows Terraform Labs' 2024 bankruptcy filing and is part of ongoing efforts to recover assets for creditors. Experts suggest the case could clarify the application of insider trading laws to decentralized finance markets and potentially influence future compliance for crypto trading platforms.