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

Jane Street has requested that a US court dismiss a lawsuit filed by the bankruptcy estate of Terraform Labs, denying allegations that the trading firm played a role in the 2022 collapse of the TerraUSD stablecoin and its sister token, Luna. In a Thursday filing to the Southern District of New York, Jane Street and several employees argued that the lawsuit is an attempt to deflect responsibility for the failure of the Terra ecosystem, which wiped out approximately $40 billion in value. The firm urged the court to dismiss the complaint with prejudice, thereby preventing Terraform from pursuing the same claims in the future. According to Jane Street, the lawsuit is an attempt by Terraform's estate to hold the firm liable for a fraud perpetrated by Terraform itself. The company 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, as evidence that the core issues surrounding Terra's collapse have already been settled. Terraform's lawsuit, filed in January, accuses Jane Street of insider trading that contributed to the collapse, alleging that the firm used non-public information from Terraform insiders to trade ahead of major market moves. However, Jane Street disputes this narrative and denies any involvement in the collapse, maintaining 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 how responsibility for the collapse is assigned.