Terraform Labs' bankruptcy administrator has filed a federal lawsuit against trading giant Jane Street, accusing it of using confidential insider information to profit from the catastrophic $40 billion collapse of the Terra/Luna ecosystem in May 2022. The lawsuit, filed on February 23, 2026, in the Southern District of New York, names Jane Street co-founder Robert Granieri and employees Bryce Pratt and Michael Huang.
The complaint's central allegation focuses on May 7, 2022. It claims that Terraform Labs quietly withdrew 150 million UST from the Curve 3pool liquidity pool without public announcement. Within 10 minutes, a wallet linked to Jane Street executed the largest single swap on the platform, pulling 85 million UST from the same pool. The lawsuit states this trade "would have been impossible without inside information," allowing Jane Street to unwind hundreds of millions in UST exposure and avoid over $200 million in losses before TerraUSD (UST) lost its dollar peg and Luna entered a death spiral days later.
The alleged insider information was funneled through a group chat named "Bryce's Secret," created by former Terraform intern and then-Jane Street employee Bryce Pratt. The chat included Terraform engineers and business development staff. In one cited message, a Terraform engineer wrote, "bro we all know who the buyer is. its where u work… Jane Streeeeeeeet." The lawsuit includes 13 counts covering insider trading, securities fraud, and unjust enrichment, seeking damages and disgorgement of profits.
Jane Street has vehemently denied all allegations, calling the lawsuit a "desperate" and "transparent attempt to extract money" and blaming the losses on the "multibillion-dollar fraud perpetrated by the management of Terraform Labs." Terraform founder Do Kwon is currently serving a 15-year prison sentence.
Separately, Jane Street faces regulatory action in India. In July 2025, India's Securities and Exchange Board (SEBI) barred the firm from Indian securities markets, alleging it manipulated the BANKNIFTY and NIFTY 50 indices over 18 derivative expiry days, generating roughly $4.3 billion in profits. SEBI impounded approximately $566 million in gains. Jane Street has appealed, calling the SEBI probe "biased."
The lawsuit's emergence coincided with a sharp rally in crypto markets on February 26, 2026, with the total market cap adding over $170 billion. Some traders and analysts speculated online that the absence of a typical "10 a.m. dump" was linked to Jane Street being named in the suit, though no public evidence confirms the firm sold Bitcoin at a fixed daily time.
