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

Jane Street has requested a US court to dismiss a lawsuit filed by the Terraform Labs bankruptcy estate, denying allegations that the trading firm contributed to the 2022 collapse of the TerraUSD stablecoin and its sister token Luna. In a filing submitted to the Southern District of New York, Jane Street and its employees argued that the case is an attempt to deflect responsibility for the failure of the Terra ecosystem, which wiped out approximately $40 billion in value over several days. The firm urged 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 firm 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. Jane Street argued that Kwon's admission of guilt and the subsequent court rulings have already settled the core issues surrounding Terra's collapse. The lawsuit, filed by Terraform administrator Todd Snyder in January, accuses Jane Street of insider trading that accelerated the collapse of the Terra ecosystem. Snyder alleged that Jane Street used confidential information from Terraform insiders to trade ahead of major market moves, including large withdrawals from the Curve liquidity pool that preceded UST losing its dollar peg. Jane Street disputed this narrative, denying any involvement in the collapse and maintaining that Terraform's fraud scheme has already been prosecuted and punished. The collapse of Terraform Labs, founded in 2018, had far-reaching consequences for 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.