Trading firm Jane Street has requested a Manhattan federal court dismiss a lawsuit from the bankrupt Terraform Labs’ administrator. The administrator, Todd Snyder, sued Jane Street in February, alleging insider trading that worsened Terra’s $40 billion collapse. Jane Street’s motion argues Terraform seeks to extract cash for a fraud it perpetrated, claiming its trading was based on public market signals, not insider information.
Jane Street Group has asked a U.S. court to dismiss a lawsuit from the administrator of bankrupt Terraform Labs. The firm filed a motion to dismiss in Manhattan federal court, calling the suit an attempt to extract cash for a fraud Terraform itself perpetrated.
The court-appointed administrator, Todd Snyder, had sued Jane Street and three individuals in February. He accused them of trading Terra tokens after receiving nonpublic information from Terraform insiders.
Terraform Labs collapsed in May 2022 when its algorithmic stablecoin lost its peg. This event sent the connected LUNA token tumbling and wiped out an estimated $40 billion in market value.
Jane Street’s motion argues investors saw public signs of the collapse. The firm states it moved to sell a deteriorating investment as the market was visibly collapsing.
The motion notes that Terraform founder Do Kwon pleaded guilty to fraud charges and was sentenced to prison. “Terraform’s fraud scheme — in which Jane Street had no involvement — has already been prosecuted, adjudicated, and punished,” the filing stated.
Jane Street also claims the complaint is self-defeating. It points out that the alleged largest sale occurred ten minutes after the supposed insider information was publicly visible.
The firm further argues the administrator failed to identify any material nonpublic information it received. “Plaintiff pleads ‘on information and belief’… yet cannot identify a single communication,” the motion said.
Jane Street has asked the court to dismiss the suit with prejudice. This would prevent Terraform Labs from bringing the same lawsuit again.
