Jane Street asked a US court to dismiss a lawsuit brought by the Terraform Labs bankruptcy estate, rejecting claims that the trading company helped trigger the 2022 collapse of the TerraUSD (UST) stablecoin and its sister token Luna.
In two filings filed Thursday with the Southern District of New York, Jane Street and several employees said the case is an attempt to shift blame for the failure of the Terra ecosystem, which wiped out roughly $40 billion in value in a matter of days.
The firm urged the court to dismiss the complaint with prejudice, which would prevent Terraform from bringing the same claims again.
“This case is an attempt by the heirs of Terraform Labs to extract cash from Jane Street to foot the bill for a fraud that Terraform itself perpetrated on the marketplace,” the defendants wrote.
Jane Street argued that the central issues behind Terra’s collapse have already been resolved in court. He pointed to criminal and civil cases against Terraform founder Do Kwon, who pleaded guilty to conspiracy and wire fraud and is serving a 15-year prison sentence. A jury also found Kwon and Terraform liable for securities fraud. According to the filing, Kwon said he was “solely responsible for everyone’s pain.”
Terraform’s lawsuit, filed in January by administrator Todd Snyder, accuses Jane Street of using insider trading that accelerated the collapse. Snyder alleges that the company used non-public information from Terraform insiders to trade ahead of major moves, including large withdrawals from Curve’s liquidity pool that preceded UST’s loss of its peg to the dollar.
For example, the complaint claims that Terraform withdrew 150 million UST on May 7, 2022, and that a wallet linked to Jane Street withdrew 85 million UST minutes later, causing market panic. Jane Street disputes that narrative and denies any role in the collapse.
Jane Street maintains that “Terraform’s fraud scheme, in which Jane Street had no part, has already been prosecuted, tried and punished.”
Terraform Labs, founded in 2018, filed for bankruptcy in January 2024. Its downfall spread throughout the cryptocurrency sector and contributed to the bankruptcies of several companies exposed to the project. The court’s decision on Jane Street’s motion could determine how responsibility for that collapse is assigned.
