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

Jane Street has filed a motion to dismiss a lawsuit brought by the Terraform Labs bankruptcy estate, contesting claims that the firm contributed to the 2022 collapse of the TerraUSD stablecoin and its sister token, Luna. In its filing to the Southern District of New York, Jane Street asserts that the lawsuit is an attempt to shift responsibility for the Terra ecosystem's failure, which wiped out approximately $40 billion in value. The firm is seeking a dismissal with prejudice, which would prevent Terraform from pursuing the same claims in the future. Jane Street argues that the key issues surrounding Terra's collapse have already been settled in court, citing 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. The firm also points to a jury's finding that Kwon and Terraform were liable for securities fraud. According to Jane Street, Kwon has acknowledged being 'alone responsible for everyone's pain.' The lawsuit, filed by Terraform administrator Todd Snyder in January, alleges that Jane Street engaged in insider trading, using nonpublic information from Terraform insiders to trade ahead of significant moves. However, Jane Street disputes this narrative and denies any involvement in the collapse. The firm maintains that Terraform's fraud scheme, in which Jane Street had no involvement, has already been prosecuted, adjudicated, and punished. Terraform Labs, founded in 2018, filed for bankruptcy in January 2024, and its downfall had a ripple effect across the crypto sector, contributing to failures at several firms exposed to the project. The court's decision on Jane Street's motion could have significant implications for how responsibility for the collapse is assigned.