A court-appointed administrator overseeing the dismantling of Terraform Labs (LUNC) has launched legal action against quantitative trading firm Jane Street, accusing the company of exploiting confidential information to trade profitably during the final days of the Terra ecosystem.
The complaint, filed in federal court in Manhattan, claims the firm and several of its senior figures used private communications with Terraform staff to anticipate market-moving events and execute trades before those developments became public.
Todd Snyder, who is managing the wind-down of the bankrupt company, is seeking financial compensation from Jane Street, co-founder Robert Granieri, and traders Bryce Pratt and Michael Huang.
Alleged Backchannel Communications And The Curve Pool Trades
According to the filing, Jane Street established direct trading ties with Terraform years before the collapse but only ramped up activity in early 2022.
The lawsuit alleges that Pratt, who had previously worked at Terraform, reconnected with former colleagues and created informal channels through which internal updates were shared.
One such messaging group, described in the complaint as a conduit for non-public information, allegedly allowed the trading firm to monitor sensitive developments inside the crypto company.
The administrator argues that this access gave Jane Street an informational advantage during the crucial days of May 2022, when TerraUSD began to lose its dollar peg.
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The filing points to a large withdrawal of the stablecoin from the Curve liquidity pool that had not yet been disclosed to the broader market.
Within minutes of that transaction, a wallet linked by some analysts to Jane Street is said to have carried out a similar move, a sequence the lawsuit characterizes as evidence of advance knowledge.
Terra’s $40 Billion Collapse And The Expanding Legal Fallout
Terraform’s algorithmic stablecoin collapsed days later, wiping out roughly $40 billion in value and triggering a chain reaction across the digital-asset sector.
The fallout spread through lenders, hedge funds and exchanges, contributing to a wider market crisis that culminated in the failure of FTX.
Hundreds of thousands of investors were affected globally.
Terraform sought bankruptcy protection in early 2024, and a trust was later formed to recover funds for creditors.
Founder Do Kwon is currently serving a prison sentence after admitting to criminal charges tied to the project.
Snyder said the case is intended to pursue those who may have benefited from privileged access during one of the most damaging episodes in crypto’s history.
Jane Street has rejected the accusations, arguing that the losses tied to Terra and Luna stemmed from misconduct within Terraform itself and saying it will contest the claims.
The new lawsuit follows a separate action brought by the same administrator against Jump Trading, which is accused of entering into undisclosed arrangements to support TerraUSD before the collapse and exiting the episode with substantial gains.
The complaint also highlights communications in the days after the de-pegging began, alleging that Jane Street continued to trade while drawing on information obtained through its network of industry contacts.
Jane Street has long been a major presence in digital-asset markets and is known for having employed former FTX and Alameda Research executives earlier in their careers.
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