Terraform Estate Sues Jane Street Over Trades Tied to 2022 Crypto Market Collapse: WSJ
Terraform Labs’ bankruptcy administrator has sued Jane Street, alleging the trading firm used non-public information to profit during the 2022 collapse of TerraUSD. The lawsuit claims Jane Street accessed advance knowledge of Terraform’s internal liquidity moves and made trades as TerraUSD lost its dollar peg. Similar lawsuits have targeted other trading firms, like Jump Trading, for allegedly contributing to Terra’s collapse. Jane Street denies wrongdoing, calling the lawsuit a baseless effort to recoup losses stemming from Terraform’s own fraud. Legal experts say the case could set a precedent, expanding the definition of “insider trading” in crypto by treating private chats and informal channels as sources of privileged information. This would make firms liable even without traditional corporate ties if they traded on confidential protocol data. The Terraform collapse wiped out $40 billion, contributed to a wider industry downturn, and led to the downfall of major crypto players, including FTX. Following the collapse, Terraform filed for bankruptcy, and its founder, Do Kwon, is serving a 15-year prison sentence for criminal charges.
