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

Jane Street has requested a US court to reject a lawsuit filed by the bankruptcy estate of Terraform Labs, arguing that the claims of helping trigger the 2022 collapse of the TerraUSD stablecoin and its sister token Luna are unfounded. In a Thursday 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 has urged the court to dismiss the complaint with prejudice, preventing Terraform from pursuing the same claims again. Jane Street argued that the primary issues surrounding Terra's collapse have already been resolved in court, citing cases against Terraform founder Do Kwon, who pleaded guilty to conspiracy and wire fraud and is currently serving a 15-year prison sentence. The firm pointed out that Kwon acknowledged being 'alone responsible for everyone's pain.' Terraform's lawsuit, filed by administrator Todd Snyder in January, accuses Jane Street of insider trading that accelerated the collapse. Snyder alleged that the firm used confidential information from Terraform insiders to trade ahead of significant moves, including large withdrawals from the Curve liquidity pool that preceded UST losing its dollar peg. Jane Street disputes this narrative and denies any involvement in the collapse. The company maintains 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, with its downfall having 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.