Jane Street Seeks Dismissal of Terraform Lawsuit Tied to 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 of triggering the 2022 collapse of the TerraUSD stablecoin and its sister token Luna are without merit. In court filings, Jane Street and its employees stated that the lawsuit 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 'extract cash' to compensate for a fraud perpetrated by Terraform itself. The firm pointed to previous 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 argued that Kwon's admission of responsibility for the collapse, stating he was 'alone responsible for everyone's pain,' further supports their claim that Terraform's lawsuit is unfounded. The lawsuit, filed by Terraform administrator Todd Snyder, alleges that Jane Street engaged in insider trading, using nonpublic information to trade ahead of major market moves, including large withdrawals from the Curve liquidity pool that preceded UST losing its dollar peg. 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 firm's motion to dismiss the lawsuit could have significant implications for how responsibility for the Terra ecosystem's collapse is assigned, with a decision potentially shaping the outcome of similar cases in the future.