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

Jane Street has filed a motion to dismiss a lawsuit brought by the bankruptcy estate of Terraform Labs, denying claims that the trading firm contributed to the 2022 collapse of the TerraUSD stablecoin and its sister token Luna. In a filing to the Southern District of New York, Jane Street and its employees stated that the case is an attempt to deflect responsibility for the failure of the Terra ecosystem, which saw $40 billion in value erased within days. The firm is urging the court to dismiss the complaint with prejudice, preventing Terraform from pursuing the same claims in the future. Jane Street argued 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 pleaded guilty to conspiracy and wire fraud and is currently serving a 15-year prison sentence. The company pointed out that Kwon has taken responsibility for the fraud, stating he was 'alone responsible for everyone's pain.' Terraform's lawsuit, filed in January, 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.' The court's decision on Jane Street's motion could have significant implications for how responsibility for the collapse is assigned. Terraform Labs, which filed for bankruptcy in January 2024, has had a ripple effect on the crypto sector, contributing to the failures of several firms exposed to the project.