Terraform Administrator Sues Jane Street Over Trades Linked to 2022 Collapse
The Terraform Labs bankruptcy administrator has sued jane street, alleging the quantitative trading firm used non-public information to profit at the height of the crypto market collapse in May 2022 and that those trades worsened losses for creditors.
Jane Street accused of using non-public information
The complaint centers on claims that jane street obtained advance insight into Terraform’s internal liquidity decisions and positioned trades as TerraUSD began to lose its dollar peg in May 2022, the administrator says. Todd Snyder, the court-appointed plan administrator for Terraform Labs, alleged that “Jane Street abused market relationships to rig the market in its favor during one of the most consequential events in crypto history. ”
Terraform collapsed in May 2022 after its algorithmic stablecoin TerraUSD lost its dollar peg, sending its sister token Luna into a near-total wipeout within days. The roughly $40 billion implosion erased billions in investor value and intensified stress across the broader crypto market.
Private chats, misappropriation theory and legal stakes
The lawsuit frames private back channels and crisis communications as potential sources of privileged information. Public affairs attorney Andrew Rossow said the filing “seems to argue that the most important moves do happen in private chats before hitting the blockchain, ” and that the case could push a broader misappropriation theory in crypto law, expanding who counts as an insider in such disputes.
Under that approach, liability would not depend on a traditional corporate insider relationship; the administrator argues a market maker could face exposure if it obtained confidential information from a protocol team and used it to trade against the broader market. Rossow added that private chat groups could be treated as the equivalent of a corporate boardroom, making insider status extend to anyone with direct access to a protocol’s crisis ‘war room. ’
Industry reaction and related litigation
Jane Street called the suit “desperate” and said it will “defend ourselves vigorously against these baseless, opportunistic claims. ” The administrator’s move follows a separate lawsuit filed in U. S. federal court in late December against Jump Trading that accused that firm of unlawfully profiting from and materially contributing to the collapse of the Terra ecosystem.
Terraform filed for bankruptcy in January 2024, and a wind-down trust was later established to pursue recoveries for creditors. Founder Do Kwon has pleaded guilty in matters connected to the collapse.
The administrator’s complaint marks the next stage of the wind-down trust’s recovery effort in federal court, following the December lawsuit against Jump Trading. The trust will continue to pursue legal recoveries for creditors as the case proceeds in U. S. federal court.
