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 filings submitted to the Southern District of New York, Jane Street and its employees argue that the case is an attempt to deflect responsibility for the Terra ecosystem's failure, which wiped out approximately $40 billion in value. The firm has 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 points to existing court cases against Terraform founder Do Kwon, who has been found guilty of conspiracy and wire fraud and is serving a 15-year prison sentence, as evidence that the core issues have already been settled. Terraform's lawsuit, filed in January, alleges that Jane Street engaged in insider trading, using non-public information to trade ahead of major moves and hastening the collapse. However, Jane Street disputes 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, which filed for bankruptcy in January 2024, had a significant impact on the crypto sector, contributing to the failure of several firms exposed to the project. The court's decision on Jane Street's motion could have significant implications for how responsibility for the collapse is assigned.