Jane Street Seeks Dismissal of Lawsuit Over UST-LUNA Collapse

Jane Street has requested a US court to dismiss a lawsuit filed by the bankruptcy estate of Terraform Labs, denying allegations that the trading firm contributed to the 2022 collapse of the TerraUSD stablecoin and its sister token Luna. In a Thursday filing with the Southern District of New York, Jane Street and its employees argued that the case is an attempt to deflect responsibility for the Terra ecosystem's failure, which wiped out approximately $40 billion in value. The firm asked the court to dismiss the complaint with prejudice, preventing Terraform from pursuing the same claims in the future. According to Jane Street, the lawsuit is an attempt to 'extract cash' to compensate for a fraud perpetrated by Terraform itself. The company pointed to previous court cases against Terraform founder Do Kwon, who pleaded guilty to conspiracy and wire fraud and is currently serving a 15-year prison sentence. A jury also found Kwon and Terraform liable for securities fraud, with Kwon acknowledging 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 accelerated the collapse. However, Jane Street disputes this narrative, denying any involvement in the collapse and maintaining that 'Terraform's fraud scheme - in which Jane Street had no involvement - has already been prosecuted, adjudicated, and punished.' Terraform Labs, founded in 2018, 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.