The court-appointed administrator winding down Terraform Labs has filed a federal lawsuit in Manhattan accusing quantitative trading giant Jane Street, its co-founder Robert Granieri, and two traders of insider trading during the May 2022 collapse of the Terra ecosystem. The complaint alleges that Jane Street used material non-public information obtained from Terraform insiders to liquidate its entire UST position and open a large short trade, netting approximately $134 million in illicit profits while retail investors suffered catastrophic losses.
According to the lawsuit, a Jane Street employee and former Terraform Labs intern, Bryce Pratt, relayed confidential details via a private Telegram chatroom dubbed “Bryce’s Secret.” Shortly after Terraform Labs withdrew $150 million in liquidity from a Curve Finance pool on May 7, 2022, Jane Street sold $85 million in UST within nine minutes. The firm ultimately offloaded around $192 million worth of the algorithmic stablecoin just hours before it lost its dollar peg. The collapse wiped out an estimated $40 billion in market value, triggering cascading liquidations across crypto markets.
Jane Street has moved to dismiss the case, calling the complaint “self-defeating” and a “desperate effort” to shift blame for Terraform’s fraud. The firm argues that its single largest UST sale occurred ten minutes after the alleged non-public information was visible to the market, and that it simply “sold a deteriorating investment” as public signs of failure mounted. The liquidator is seeking to claw back the $134 million profit plus additional damages, asserting that Jane Street’s trades accelerated the death spiral. The case will test how insider trading laws apply to digital assets and decentralized finance.
