Jane Street is asking a U.S. court to dismiss a lawsuit filed by the bankruptcy estate of Terraform Labs, dismissing claims that the trading company helped trigger the 2022 collapse of the TerraUSD (UST) stablecoin and its sister token Luna.
In two filings with the Southern District of New York on Thursday, Jane Street and several employees said the case was an attempt to deflect blame for the failure of the Terra ecosystem, which saw about $40 billion in value evaporate in a matter of days.
The company urged the court to dismiss the complaint with prejudice, which would prevent Terraform from making the same claims again.
“This case is an attempt by the Terraform Labs estate to withdraw cash from Jane Street to pay for fraudulent conduct in the marketplace perpetrated by Terraform itself,” the defendants wrote.
Jane Street argued that the core issues behind Terra’s debacle had already been resolved in court. It pointed to criminal and civil cases against Terraform founder Do Kwon, who pleaded guilty to conspiracy and wire fraud and is currently serving a 15-year prison sentence. The jury also found Kwon and Terraform liable for securities fraud. Kwon said he was “solely responsible for everyone’s suffering,” according to the documents.
Terraform’s lawsuit, filed in January by administrator Todd Snyder, alleges that Jane Street’s insider trading accelerated the company’s collapse. Snyder alleges that the company used non-public information from Terraform insiders to trade ahead of major moves, including massive withdrawals from the Curve liquidity pool before UST lost its peg to the U.S. dollar.
For example, the complaint alleges that Terraform withdrew 150 million UST on May 7, 2022, while wallets associated with Jane Street withdrew 85 million UST minutes later, causing market panic. Jane Street disputes that account and denies any involvement in the collapse.
Jane Street maintains that “Terraform’s fraudulent scheme – in which Jane Street had no part – has been prosecuted, adjudicated and punished.”
Terraform Labs was founded in 2018 and filed for bankruptcy in January 2024. Its downfall rippled across the entire cryptocurrency industry, leading to the collapse of several companies involved in the project. The court’s ruling on Jane Street’s motion could affect how liability for an accident is allocated.
