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

Jane Street has requested a US court to dismiss a lawsuit filed by Terraform Labs' bankruptcy estate, which alleges that the trading firm contributed to 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 its employees stated that the case is an attempt to deflect responsibility for the failure of the Terra ecosystem, which resulted in approximately $40 billion in losses. The firm has urged the court to dismiss the complaint with prejudice, preventing Terraform from pursuing the same claims in the future. Jane Street argued that the primary issues surrounding Terra's collapse have already been resolved in court, citing criminal and civil cases against Terraform founder Do Kwon, who pleaded guilty to conspiracy and wire fraud and is currently serving a 15-year prison sentence. The company pointed out that Kwon has taken full responsibility for the collapse, stating he was 'alone responsible for everyone's pain.' Terraform's lawsuit, filed in January by administrator Todd Snyder, accuses Jane Street of insider trading, alleging that the firm used confidential information from Terraform insiders to trade ahead of major market moves. However, Jane Street disputes this claim, denying any involvement in the collapse. The company maintains that Terraform's fraud scheme, which has already been prosecuted and punished, was the sole cause of the collapse. Terraform Labs, founded in 2018, filed for bankruptcy in January 2024, and its downfall had a ripple effect across the crypto sector, contributing to the failures of several firms exposed to the project. The court's decision on Jane Street's motion may influence how responsibility for the collapse is assigned.