Terraform Labs’ bankruptcy administrator has sued Jane Street Group in federal court in Manhattan, alleging the trading firm used non-public information and front-ran trades during the May 2022 collapse of TerraUSD (UST) and LUNA. The complaint was filed Monday by Todd Snyder, who is seeking to recover value for creditors.
The lawsuit names Jane Street co-founder Robert Granieri, along with employees Bryce Pratt and Michael Huang. At the center of the case is an alleged $85 million UST sale that took place minutes after a confidential liquidity withdrawal by Terraform Labs. Snyder claims those trades helped shield Jane Street from losses while worsening pressure on UST’s peg.
Complaint centers on trades after a confidential liquidity withdrawal
According to the filing, Jane Street had access to Terraform’s internal decisions, including plans to pull liquidity from a pool. Terraform argues that this gave the firm an opportunity to trade ahead of the market and intensify the depegging event. The complaint describes the conduct as insider trading and front-running tied directly to the unraveling of UST.
The case seeks damages on behalf of creditors and aims to hold Jane Street responsible for conduct that, according to the complaint, deepened the Terra-LUNA crisis. The filing also adds to the growing examination of major crypto trading firms involved in the 2022 market collapse.
Terra crash wiped out roughly $40 billion
The TerraUSD breakdown erased about $40 billion in market value. UST lost its dollar peg, and LUNA fell to near zero within days. The event remains one of the most destructive failures in the history of the crypto market.
Earlier investigations had already reviewed Telegram chats involving Jump Trading, Jane Street, and Alameda Research to assess whether communications before the collapse could amount to market manipulation. This new lawsuit puts Jane Street under sharper legal scrutiny.
Broader legal campaign expands beyond Jane Street
Terraform’s administrator has also brought a $4 billion claim against Jump Trading over alleged market manipulation connected to the UST rescue plan. Taken together, the actions show Terraform continuing its court-led effort to recover losses and assign responsibility for trading activity around the collapse.
The report said the broader Terra community welcomed the lawsuit against Jane Street, citing the scale of past losses and the continuing impact on investors. Community members also said the case could affect how insider-liability rules develop in decentralized markets, as debate over the CLARITY Act continues.