Jane Street Seeks Dismissal of Lawsuit Tied to UST-LUNA Collapse

Jane Street has filed a motion to dismiss a lawsuit brought by the bankruptcy estate of Terraform Labs, arguing that the claims against it are an attempt to deflect responsibility for the 2022 collapse of the TerraUSD stablecoin and its sister token, Luna. The firm asserts that the case is an effort to hold it liable for losses caused by internal misconduct within Terraform. In its filing to the Southern District of New York, Jane Street contends that the lawsuit rehashes events that have already been resolved in court, including criminal and civil cases against Terraform founder Do Kwon, who has been found guilty of conspiracy, wire fraud, and securities fraud. Jane Street denies any involvement in Terraform's fraud scheme and argues that the estate's lawsuit is an attempt to extract funds to compensate for Terraform's own misconduct. The firm points out that Kwon has acknowledged being 'alone responsible for everyone's pain' and that the core issues behind the collapse have been prosecuted, adjudicated, and punished. Terraform's lawsuit, filed by administrator Todd Snyder, alleges that Jane Street engaged in insider trading, using nonpublic information to trade ahead of major moves, including large withdrawals from the Curve liquidity pool that preceded UST losing its dollar peg. Jane Street disputes these claims, maintaining that it had no role in the collapse. The court's decision on Jane Street's motion could have significant implications for how responsibility for the collapse is assigned, potentially shaping the outcome for other firms exposed to the project.