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

Jane Street has petitioned a US court to reject a lawsuit filed by Terraform Labs' bankruptcy estate, contesting allegations that the trading firm contributed to the 2022 downfall of TerraUSD (UST) and its associated token, Luna. In filings submitted to the Southern District of New York, Jane Street and its employees argued that the lawsuit is an attempt to deflect responsibility for the Terra ecosystem's collapse, which erased approximately $40 billion in value over several days. The company urged the court to dismiss the complaint with prejudice, preventing Terraform from pursuing the same claims in the future. Jane Street contended that the lawsuit is an attempt by Terraform Labs' estate to hold the firm liable for a fraud perpetrated by Terraform itself. The company pointed to prior 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. A jury also found Kwon and Terraform liable for securities fraud, with Kwon acknowledging responsibility for the harm caused. Terraform's lawsuit, filed in January by administrator Todd Snyder, alleged that Jane Street engaged in insider trading, utilizing non-public information from Terraform insiders to trade ahead of significant market moves. However, Jane Street disputed this narrative, denying any involvement in the collapse. The company maintained 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 cryptocurrency sector, contributing to the failure of several firms exposed to the project. The court's decision on Jane Street's motion may influence how responsibility for the collapse is assigned.