Jane Street Seeks Dismissal of Lawsuit Over UST-LUNA Collapse

A U.S. court has been asked by Jane Street to reject a lawsuit filed by the bankruptcy estate of Terraform Labs, which alleges that the trading firm played a role in the 2022 collapse of the TerraUSD stablecoin and its sister token, Luna. The lawsuit, filed in January, claims that Jane Street engaged in insider trading, using non-public information from Terraform insiders to trade ahead of major moves, including large withdrawals from the Curve liquidity pool that preceded the stablecoin losing its dollar peg. However, Jane Street disputes this narrative, arguing that the core issues behind Terra's collapse have already been settled in court, with Terraform founder Do Kwon pleading guilty to conspiracy and wire fraud and being sentenced to 15 years in prison. The company maintains that it had no involvement in Terraform's fraud scheme and that the lawsuit is an attempt to extract cash from Jane Street to compensate for the losses caused by Terraform's own misconduct. Jane Street has urged the court to dismiss the complaint with prejudice, which would prevent Terraform from pursuing the same claims again. The court's decision on Jane Street's motion could have significant implications for how responsibility for the collapse is assigned, with the potential to shape the outcome of similar cases in the future.