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 Terraform Labs bankruptcy estate, contesting claims that the trading firm played a role in the 2022 collapse of the TerraUSD stablecoin and its associated token, Luna. The company made this request in two filings submitted to the Southern District of New York, stating that the lawsuit is an attempt to deflect responsibility for the failure of the Terra ecosystem, which resulted in the loss of approximately $40 billion in value over several days. Jane Street urged the court to dismiss the complaint with prejudice, thereby preventing Terraform from pursuing the same claims in the future. The defendants argued that the case is an attempt by Terraform Labs' estate to hold Jane Street liable for a fraud perpetrated by Terraform itself. They pointed out that the core issues surrounding Terra's collapse have already been addressed in court, citing 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 that he was 'alone responsible for everyone's pain.' Terraform's lawsuit, filed in January by administrator Todd Snyder, alleges that Jane Street engaged in insider trading, using confidential information from Terraform insiders to trade ahead of significant market moves. However, Jane Street disputes this narrative and denies any involvement in the collapse. The company 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 cryptocurrency sector, contributing to the failures of several firms exposed to the project. The court's decision on Jane Street's motion could significantly impact the assignment of responsibility for the collapse.