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

Jane Street has filed a motion with a US court to dismiss a lawsuit brought by the Terraform Labs bankruptcy estate, contesting claims that the firm contributed to the 2022 collapse of the TerraUSD stablecoin and its companion token, Luna. In filings submitted to the Southern District of New York, Jane Street and its employees argue that the case is an attempt to deflect blame for the Terra ecosystem's failure, which resulted in the loss of approximately $40 billion in value over several days. The firm is urging the court to dismiss the complaint with prejudice, thereby preventing Terraform from pursuing the same claims in the future. Jane Street asserts that the core issues underlying Terra's collapse have already been resolved in court, citing criminal and civil cases against Terraform founder Do Kwon, who has been convicted of conspiracy and wire fraud and is currently serving a 15-year prison sentence. A jury has also found Kwon and Terraform liable for securities fraud, with Kwon acknowledging that he was 'alone responsible for everyone's pain.' The lawsuit, filed by administrator Todd Snyder in January, alleges that Jane Street engaged in insider trading that accelerated the collapse by utilizing nonpublic information from Terraform insiders to trade ahead of significant market moves. Jane Street disputes this narrative and denies any involvement in the collapse, maintaining that 'Terraform's fraud scheme — in which Jane Street had no involvement — has already been prosecuted, adjudicated, and punished.' Terraform Labs, established in 2018, filed for bankruptcy in January 2024, and its downfall had a ripple effect across the cryptocurrency sector, contributing to the failures of several firms with exposure to the project. The court's decision on Jane Street's motion may influence how responsibility for the collapse is ultimately assigned.