Terraform Labs’ court-appointed liquidator has filed a federal lawsuit in New York accusing Jane Street of using inside information during the May 2022 Terra/LUNA collapse and making about $134 million in unlawful profits. The complaint also names Jane Street co-founder Robert Granieri and traders Bryce Pratt and Michael Huang.
Complaint centers on UST sales before the depeg spiral
According to the filing, Jane Street received material, non-public information from Terraform insiders and used it to trade ahead of market-moving events, exiting positions while other investors were left holding falling UST and LUNA. The liquidator alleges the firm coordinated UST trades through a private Telegram chat and sold 85 million UST on May 7, 2022, minutes after confidential instructions were given to withdraw liquidity from a key pool.
The lawsuit says those trades were part of a broader scheme that produced roughly $134 million in illicit profit as Terra’s algorithmic stablecoin lost its peg and the ecosystem unraveled within days. It places Jane Street’s activity inside one of crypto’s most damaging blowups, describing Terra’s failure as a $40 billion collapse that triggered cascading liquidations and fed a wider credit crunch across digital asset markets.
Jane Street says the case should be thrown out
Jane Street has denied the allegations and asked a Manhattan court to dismiss the case with prejudice. In its motion, the firm argues that the administrator fails to identify any material non-public information that Jane Street actually received. It also says the complaint admits that Jane Street’s single largest UST sale came 10 minutes after the supposed non-public information had already become visible to the market, which the firm says makes the case self-defeating.
A spokesperson for Jane Street called the lawsuit “a desperate effort to pursue funds where none are owed.” The firm argues that losses suffered by UST and LUNA holders were caused by what it described as multibillion-dollar fraud by Terraform Labs leadership, not by Jane Street’s trading.
Recovery claims now hinge on what information was public
The plaintiff is seeking to claw back the alleged $134 million and additional damages, arguing that Jane Street’s trades drained liquidity and accelerated panic, hastening Terraform’s downfall. Jane Street has told the court it simply sold a deteriorating investment as public signs of Terra’s failure mounted, and that sophisticated firms and retail traders were reacting to the same market information as the peg broke.
The legal dispute now turns on a narrow question with major consequences: whether Jane Street moved faster because it had unlawful access to insider information, or because it reacted quickly to signals already in the market. That fight will now move into open court.