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, arguing that the claims are an attempt to deflect responsibility for the 2022 collapse of the TerraUSD (UST) stablecoin and its sister token Luna. In filings submitted to the Southern District of New York, Jane Street and its employees contend that the lawsuit is an effort to hold them liable for losses caused by Terraform's internal misconduct. The firm is seeking a dismissal with prejudice, which would prevent Terraform from pursuing the same claims in the future. Jane Street maintains that the core issues surrounding Terra's collapse have already been resolved in court, citing criminal and civil cases against Terraform founder Do Kwon, who has been found guilty of conspiracy and wire fraud and is currently serving a 15-year prison sentence. The firm argues that Kwon's admission of responsibility for the collapse, stating he was 'alone responsible for everyone's pain,' further supports their position. Terraform's lawsuit, filed by administrator Todd Snyder, alleges that Jane Street engaged in insider trading that accelerated the collapse of UST and Luna. However, Jane Street disputes these claims, denying any involvement in the collapse and asserting that Terraform's fraud scheme has already been prosecuted and punished. The court's decision on Jane Street's motion could have significant implications for the assignment of responsibility for the Terra ecosystem's collapse, which had far-reaching consequences for the crypto sector.