The court-appointed administrator for bankrupt Terraform Labs has filed a lawsuit against trading firm Jane Street and several individuals. The complaint alleges they used insider information to profit from and accelerate the collapse of the Terra-Luna ecosystem, claiming these trades came at the expense of investors who lost billions. Jane Street denies the accusations, calling the lawsuit a desperate attempt to extract money.
The lawsuit was filed by administrator Todd Snyder in Manhattan federal court against Jane Street, its co-founder Robert Granieri, and employees Bryce Pratt and Michael Huang. It claims the firm obtained material nonpublic information from insiders to trade ahead of the market, speeding up Terraform Labs’ downfall.
The administrator stated, “Jane Street abused market relationships to rig the market in its favor during one of the most consequential events in crypto history.” The firm’s involvement with Terraform’s tokens intensified in February 2022.
The complaint alleges former intern Bryce Pratt reconnected with old colleagues, creating a private chat called “Bryce’s Secret” to collect insider information. It claims these communications informed highly profitable trades at the expense of investors and creditors.
Jane Street has rejected the allegations. The firm insists Terraform’s losses resulted from a multibillion-dollar fraud by its management and said it will defend itself vigorously.
The lawsuit highlights a May 7, 2022, incident where Terraform moved 150 million TerraUSD from a liquidity pool. Minutes later, a wallet linked to Jane Street withdrew 85 million TerraUSD from the same pool.
Two days later, as TerraUSD lost its peg, Pratt allegedly messaged founder Do Kwon and others to discuss bids on Luna. The collapse later that month erased roughly $40 billion in value.
Terraform Labs filed for bankruptcy in January 2024. Do Kwon is now serving a 15-year prison sentence following guilty pleas on two criminal counts.
