Terraform Admin Sues Jane Street Over Alleged Insider Trading
The court-appointed administrator in Terraform Labs’ bankruptcy has filed a lawsuit against trading firm Jane Street, alleging insider trading that exacerbated the collapse of the Terra ecosystem valued in the billions of dollars.
On Monday, administrator Todd Snyder filed the complaint in Manhattan federal court against Jane Street, its co-founder Robert Granieri, and employees Bryce Pratt and Michael Huang, alleging the “misappropriation of confidential information and manipulation of market prices.”
The heavily redacted filing claims Jane Street leveraged ties to “Terraform insiders to learn material non-public information” and used it to sell tokens linked to the Terra blockchain, accelerating the platform’s downturn.
An excerpt of Todd Snyder’s complaint, including redactions. Source: CourtListener
Jane Street said it will contest what it called “baseless, opportunistic claims,” describing the action as a “transparent attempt to extract money” and asserting that losses suffered by Terra and Luna holders stemmed from a “multi-billion dollar fraud” by Terraform Labs’ management.
Terraform’s ecosystem unraveled in May 2022 after TerraUSD, its algorithmic stablecoin, lost its U.S. dollar peg, triggering a rapid decline that also sank the Terra token and erased approximately $40 billion in value.
Terraform Labs filed for U.S. bankruptcy in 2024. Its co-founder, Do Kwon, was later arrested and pleaded guilty in the United States to two fraud charges. He was sentenced to 15 years in prison in December.
Suit alleges Jane Street sold hours before collapse
Snyder’s complaint alleges Jane Street obtained information that let it reduce “hundreds of millions of dollars in potential exposure at precisely the right time, mere hours before the Terraform ecosystem collapsed.”
According to the filing, Jane Street began onboarding Terraform for trading in 2018, but activity “did not take off” until 2022 after Pratt, a former Terraform intern, reconnected with former colleagues. Snyder alleges Pratt also established contact with Terraform’s business development lead, creating a “back-channel source for material non-public information about Terraform.”
The lawsuit states that on May 7, 2022, Terraform withdrew 150 million TerraUSD tokens from a stablecoin liquidity pool without a public disclosure.
Within 10 minutes of that withdrawal, Jane Street sold 85 million TerraUSD into the same pool in what Snyder describes as the firm’s largest single swap, initiating a sell-off of the token that “ultimately led to the collapse of the Terra ecosystem.”
The complaint further alleges Jane Street continued to use sensitive information to guide TerraUSD trades during the breakdown, and that Pratt created a group chat including Terraform co-founder Do Kwon.
Snyder seeks damages, along with disgorgement and interest, and has requested a jury trial.
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