Jane Street Seeks Dismissal of Terraform Lawsuit Over UST-LUNA Collapse

Jane Street has petitioned a US court to reject a lawsuit filed by the bankruptcy estate of Terraform Labs, contesting claims that the firm contributed to the 2022 collapse of the TerraUSD stablecoin and its associated token, Luna. In filings submitted to the Southern District of New York, Jane Street and its employees contend that the lawsuit is an attempt to deflect responsibility for the Terra ecosystem's demise, which wiped out approximately $40 billion in value. The firm is urging the court to dismiss the complaint with prejudice, thereby preventing Terraform from pursuing the same claims in the future. According to Jane Street, the lawsuit is a bid to 'extract cash' and shift the blame for a 'fraud that Terraform itself perpetrated on the market'. The company argues that the key issues surrounding Terra's collapse have already been resolved in court, citing criminal and civil cases against Terraform founder Do Kwon, who has been sentenced to 15 years in prison for conspiracy and wire fraud. Jane Street also points to a jury verdict that found Kwon and Terraform liable for securities fraud. Terraform's lawsuit, filed in January by administrator Todd Snyder, alleges that Jane Street engaged in insider trading, utilizing nonpublic information from Terraform insiders to trade ahead of significant market moves. However, Jane Street disputes this narrative, denying any involvement in the collapse. The firm maintains that 'Terraform's fraud scheme – in which Jane Street had no involvement – has already been prosecuted, adjudicated, and punished'. The court's decision on Jane Street's motion may have significant implications for the assignment of responsibility for the collapse of the Terra ecosystem, which has had far-reaching consequences for the crypto sector.