Jane Street Accused of Insider Trading Contributing to Terraform Labs' Collapse

A lawsuit has been filed against Jane Street, a prominent high-frequency trading firm, accusing it of engaging in insider trading that contributed significantly to the collapse of Terraform Labs in 2022. The collapse was one of the most consequential events in the history of cryptocurrencies, with an astonishing $40 billion in market value being wiped out in just one week.

The lawsuit, filed by Todd Snyder, the administrator winding down Do Kwon's Terraform Labs, seeks damages from Jane Street co-founder Robert Granieri and employees Bryce Pratt and Michael Huang. The suit alleges that Jane Street used material nonpublic information from Terraform insiders to front-run trades and accelerate the demise of the crypto project.

The lawsuit cites specific instances where a wallet linked to Jane Street withdrew large amounts of TerraUSD from a decentralized stablecoin-focused trading platform Curve3pool before Terraform informed the public. The withdrawals allegedly triggered market panic, which ultimately led to the collapse of Terraform Labs and the loss of billions in investor wealth.