Jane Street Faces Lawsuit Over Alleged Role in Terra Collapse

A high-profile legal battle is underway in Manhattan court over the alleged role of a prominent trading firm in one of the most dramatic collapses in crypto history. The collapse of Terra (LUNA) and TerraUSD (UST) in May 2022 erased approximately $40 billion in market value within days, causing widespread damage to the broader digital asset sector.

The lawsuit filed against Jane Street alleges that the firm had insider access to Terra's stability plans and liquidity management, allowing it to avoid losses while profiting from the meltdown. The case also accuses Jane Street of orchestrating the collapse by selling 85 million UST into the market, which allegedly sparked immediate anxiety among traders and investors.

The alleged Terra-Luna timeline and trading pattern are central to the case, with prosecutors pointing to a detailed sequence of events that led to the spectacular collapse. The lawsuit argues that Jane Street's actions were not a random failure of algorithmic design alone, but rather a coordinated pattern of trading activity.