Jane Street Seeks Dismissal of Terraform Lawsuit Related to UST-LUNA Collapse

Jane Street has petitioned a US court to dismiss a lawsuit filed by the bankrupt Terraform Labs, contesting allegations that the trading firm played a role in the 2022 collapse of TerraUSD and its associated token, Luna. In court filings submitted on Thursday, Jane Street and its employees argued that the lawsuit is an attempt to shift responsibility for the failure of the Terra ecosystem, which resulted in the loss of approximately $40 billion in value over several days. The firm requested that the court dismiss the complaint with prejudice, preventing Terraform from pursuing the same claims in the future. According to Jane Street, the lawsuit is an attempt by Terraform's estate to hold the firm liable for a fraud perpetrated by Terraform itself. The core issues surrounding Terra's collapse have already been addressed in court, with Terraform founder Do Kwon pleading guilty to conspiracy and wire fraud and being sentenced to 15 years in prison. A jury also found Kwon and Terraform liable for securities fraud, with Kwon acknowledging that he was 'alone responsible for everyone's pain.' Terraform's lawsuit, filed in January by administrator Todd Snyder, accuses Jane Street of insider trading that contributed to the collapse. However, Jane Street disputes this narrative, denying any involvement in the collapse and maintaining that Terraform's fraud scheme has already been prosecuted and punished. The downfall of Terraform Labs, which filed for bankruptcy in January 2024, had far-reaching consequences for the crypto sector, contributing to the failures of several firms with exposure to the project. The court's decision on Jane Street's motion will likely influence how responsibility for the collapse is assigned.