Jane Street Seeks Dismissal of Terraform Lawsuit Tied to UST-LUNA Collapse

Jane Street has requested that a US court dismiss a lawsuit filed by the bankruptcy estate of Terraform Labs, contesting claims 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 several employees asserted that the lawsuit is an attempt to deflect responsibility for the failure of the Terra ecosystem, which wiped out approximately $40 billion in value within a matter of days. The firm urged the court to dismiss the complaint with prejudice, thereby preventing Terraform from pursuing the same claims in the future. Jane Street argued that the core 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 serving a 15-year prison term. A jury also found Kwon and Terraform liable for securities fraud, with Kwon acknowledging that he was 'alone responsible for everyone's pain.' The lawsuit, filed by administrator Todd Snyder in January, accuses Jane Street of insider trading that accelerated the collapse, alleging that the firm used non-public information from Terraform insiders to trade ahead of significant moves. Jane Street disputes this narrative, denying any involvement in the collapse and maintaining that 'Terraform's fraud scheme — in which Jane Street had no involvement — has already been prosecuted, adjudicated, and punished.' The outcome of Jane Street's motion could significantly influence how responsibility for the collapse is assigned, as Terraform Labs' downfall had far-reaching consequences for the crypto sector, contributing to the failures of several firms exposed to the project.