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

Jane Street has petitioned a US court to dismiss a lawsuit filed by Terraform Labs' bankruptcy estate, which alleges the trading firm contributed to the 2022 collapse of TerraUSD and Luna. In a Thursday filing, Jane Street and its employees argued that the case seeks to deflect responsibility for the Terra ecosystem's failure, which resulted in the loss of approximately $40 billion in value. The firm is requesting that the complaint be dismissed with prejudice, preventing Terraform from pursuing the same claims in the future. According to Jane Street, the lawsuit is an attempt to hold the company financially responsible for a fraud perpetrated by Terraform itself. The defendants pointed out that the core issues surrounding Terra's collapse have already been settled in court, citing criminal and civil cases against Terraform founder Do Kwon. Kwon pleaded guilty to conspiracy and wire fraud, and a jury found him and Terraform liable for securities fraud. Terraform's lawsuit, filed in January, accuses Jane Street of insider trading, alleging that the firm used confidential information to trade ahead of significant market moves. However, Jane Street disputes this narrative and denies any involvement in the collapse. The company maintains that Terraform's fraud scheme has already been prosecuted, adjudicated, and punished, and that it had no role in the scheme. Terraform Labs filed for bankruptcy in January 2024, and its downfall had a ripple effect across the crypto sector, contributing to the failures of several firms exposed to the project. The court's decision on Jane Street's motion could significantly impact how responsibility for the collapse is assigned.