Court Urged to Dismiss Terraform Lawsuit Against Jane Street Over UST-LUNA Collapse

Jane Street has requested that a US court dismiss a lawsuit filed by the Terraform Labs bankruptcy estate, dismissing claims that the trading firm contributed to the 2022 collapse of the TerraUSD (UST) stablecoin and its sister token Luna. In two filings submitted to the Southern District of New York, Jane Street and several employees stated that the case is an attempt to shift the blame for the Terra ecosystem's failure, which erased roughly $40 billion in value within days. The firm urged the court to dismiss the complaint with prejudice, preventing Terraform from pursuing the same claims again. According to Jane Street, this case is an attempt by Terraform Labs' estate to hold the firm liable for a fraud perpetrated by Terraform itself. The core issues behind Terra's collapse have already been settled in court, with Terraform founder Do Kwon pleading guilty to conspiracy and wire fraud and being sentenced to 15 years in prison. A jury also found Kwon and Terraform liable for securities fraud. Terraform's lawsuit, filed in January, accuses Jane Street of insider trading that accelerated the collapse. However, Jane Street disputes this narrative and denies any involvement in the collapse, maintaining that Terraform's fraud scheme has already been prosecuted, adjudicated, and punished. The court's decision on Jane Street's motion could significantly impact how responsibility for the collapse is assigned, as Terraform Labs' downfall had a ripple effect across the crypto sector, contributing to failures at several firms exposed to the project.