Key Points
- Manhattan federal court receives Jane Street’s motion to dismiss Terraform Labs’ insider trading allegations
- The trading firm characterizes the lawsuit as blame-shifting for fraud committed by Terraform
- Do Kwon, Terraform’s founder, entered a guilty plea to conspiracy and wire fraud charges, receiving a 15-year sentence
- Jane Street contends its most significant transactions occurred after critical information entered the public domain
- The firm requests dismissal with prejudice to prevent Terraform from refiling identical claims
Jane Street, a prominent trading firm, has submitted a motion to Manhattan federal court requesting dismissal of allegations brought by Terraform Labs’ bankruptcy estate. The estate accused the firm of engaging in insider trading that exacerbated the devastating 2022 Terra ecosystem collapse.
🚨LATEST: Jane Street has filed to DISMISS Terraform Labs’ insider trading lawsuit over the UST/LUNA collapse.
Case so far:
1. Terraform sued Jane Street, blaming it for the collapse via insider trading and market manipulation
2. Jane Street says its largest trades occurred… pic.twitter.com/Mj60RkgGvf
— Coin Bureau (@coinbureau) April 24, 2026
Todd Snyder, the court-appointed administrator for Terraform, initiated the legal action in February. The complaint targeted Jane Street alongside co-founder Robert Granieri and employees Bryce Pratt and Michael Huang. According to the filing, these defendants allegedly executed trades involving Terra tokens based on confidential information obtained from Terraform insiders.
The trading firm delivered a forceful response through its dismissal motion. Jane Street characterized the legal action as an effort “to extract cash from Jane Street to foot the bill for a fraud that Terraform itself perpetrated on the market.”
The Terra network experienced a catastrophic failure in May 2022. TerraUSD, its algorithmic stablecoin, suffered a swift depegging from the dollar. This triggered a devastating crash in the LUNA token, eliminating approximately $40 billion in market value.
Prior Legal Proceedings Address the Core Fraud
The central pillar of Jane Street’s defense rests on the fact that courts have already adjudicated the fundamental fraud. Do Kwon, who founded Terraform, entered a guilty plea in December to charges of conspiracy and wire fraud. He currently serves a 15-year prison term.
A jury additionally determined that Terraform and Kwon bore civil liability for securities fraud. Kwon personally acknowledged being “alone responsible for everyone’s pain,” the court documents reveal.
Jane Street maintains it played no role in Terraform’s fraudulent activities and argues that revisiting the collapse’s origins through this litigation represents an improper legal strategy.
The firm referenced the “Wagoner rule,” a legal doctrine preventing bankruptcy estates from pursuing third parties to recover damages stemming from their own fraudulent conduct.
Defense Dismantles Insider Trading Accusations
Jane Street mounted a direct challenge to the insider trading allegations. The firm highlighted that its most substantial TerraUSD sale occurred merely 10 minutes after the allegedly confidential information became available to market participants.
According to the legal filing, Terraform claimed Jane Street secured an advantage through “back-channel communications” regarding the timing of a liquidity pool transition. Jane Street counters that Terraform failed to pinpoint even a single specific communication, despite conducting extensive pre-lawsuit discovery.
Jane Street emphasized that Terraform had publicly disclosed the liquidity pool transition weeks before any trading activity occurred, and market participants showed no reaction to that announcement.
The firm initiated a short position on May 8, 2022, and executed asset sales on May 7. Jane Street maintains that Terraform has failed to identify any information that qualified as both material and confidential during those trading windows.
Jane Street raised an additional jurisdictional challenge, asserting that Terraform has not demonstrated the disputed trades occurred within United States territory.
The firm seeks dismissal with prejudice from the court, a ruling that would bar Terraform’s estate from pursuing these allegations in future litigation.
