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 it helped trigger the 2022 collapse of the TerraUSD stablecoin and its sister token Luna are unfounded. In its filings, Jane Street asserts that the case is an attempt to deflect responsibility for the failure of the Terra ecosystem, which wiped out approximately $40 billion in value. 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 hold the firm liable for a fraud perpetrated by Terraform itself. The company points to prior 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. Jane Street argues that these prior cases have already established the core issues behind Terra's collapse and that it had no involvement in the fraud scheme. The lawsuit, filed by Terraform administrator Todd Snyder, alleges that Jane Street engaged in insider trading, using nonpublic information to trade ahead of major moves, including large withdrawals from the Curve liquidity pool that preceded UST losing its dollar peg. However, Jane Street disputes this narrative, denying any role in the collapse. The company maintains that Terraform's fraud scheme has already been prosecuted, adjudicated, and punished, and that it should not be held responsible for the collapse. The court's decision on Jane Street's motion could have significant implications for how responsibility for the collapse is assigned, potentially shaping the outcome of similar cases in the future.