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 of triggering the 2022 collapse of the TerraUSD (UST) stablecoin and its sister token Luna are unfounded. In filings submitted to the Southern District of New York, Jane Street and its employees contend that the case is an attempt to deflect responsibility for the failure of the Terra ecosystem, which wiped out approximately $40 billion in value within days. The firm is urging 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 company points to previous court 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. A jury has also held Kwon and Terraform liable for securities fraud, with Kwon acknowledging responsibility for the harm caused. Terraform's lawsuit, filed in January, alleges that Jane Street engaged in insider trading, utilizing nonpublic information from Terraform insiders to trade ahead of significant market moves. However, Jane Street denies these claims and maintains that it had no involvement in Terraform's fraud scheme, which has already been prosecuted and punished. The collapse of Terraform Labs, founded in 2018, has had far-reaching consequences, contributing to the failures of several firms exposed to the project. The court's decision on Jane Street's motion may have significant implications for how responsibility for the collapse is assigned.