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

A US court has been asked by Jane Street to reject a lawsuit filed by Terraform Labs' bankruptcy estate, which alleges the trading firm's actions contributed to the 2022 collapse of the TerraUSD stablecoin and its sister token, Luna. In a Thursday filing, Jane Street and its employees stated that the lawsuit is an attempt to deflect responsibility for the Terra ecosystem's failure, which erased nearly $40 billion in value. The company urged the court to dismiss the complaint, citing that the core issues surrounding Terra's collapse have already been addressed in court. Jane Street pointed to the 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 firm argued that Terraform's lawsuit, filed in January, is an attempt to extract funds from Jane Street to compensate for a fraud perpetrated by Terraform itself. Terraform's lawsuit accuses Jane Street of insider trading, alleging the firm used nonpublic information to trade ahead of significant market moves. 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 court's decision on Jane Street's motion could significantly impact how responsibility for the collapse is assigned, potentially shaping the outcome for firms exposed to the project.