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

Jane Street has filed a motion to dismiss a lawsuit brought by Terraform Labs' bankruptcy estate, contesting claims that the trading firm contributed to the 2022 collapse of TerraUSD (UST) and its associated token, Luna. In filings submitted to the Southern District of New York, Jane Street and its employees assert that the case is an attempt to deflect 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 core issues surrounding Terra's collapse have already been settled in court, citing criminal and civil cases against Terraform founder Do Kwon, who has been convicted of conspiracy and wire fraud and is currently serving a 15-year prison sentence. The company maintains that Kwon and Terraform have already been held liable for securities fraud and that the founder has acknowledged his role in the collapse. Terraform's lawsuit, filed in January, alleges that Jane Street engaged in insider trading, using nonpublic information from Terraform insiders to trade ahead of significant market moves, including large withdrawals from the Curve liquidity pool that preceded UST losing its dollar peg. However, Jane Street disputes this narrative and denies any involvement in the collapse. The company asserts 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 have significant implications for the assignment of responsibility for the Terra ecosystem's collapse, which had far-reaching consequences for the crypto sector.