Terraform Bankruptcy Estate Sues Jane Street Over Alleged Insider Trading in 2022 TerraUSD Collapse

Lawsuit Filed Feb. 23, 2026 Alleges Front-Running, Secret Chats, and Profits Tied to $40B Terra Market Wipeout

TL;DR

• Terraform’s bankruptcy administrator filed an 83-page lawsuit on February 23, 2026, accusing Jane Street of insider trading tied to the Terra collapse.
• Complaint centers on a May 7, 2022 withdrawal of 150 million UST from Curve, followed minutes later by an alleged 85 million UST withdrawal by a Jane Street-linked wallet.
• Estate seeks damages and disgorgement as Jane Street calls the case “desperate,” “baseless,” and “opportunistic.”

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Terraform Labs’ court-appointed bankruptcy administrator Todd Snyder filed an 83-page civil complaint on February 23, 2026 in the U.S. District Court for the Southern District of New York against Jane Street Group LLC and three individuals: co-founder Robert Granieri and employees Bryce Pratt and Michael Huang. The lawsuit accuses the quantitative trading firm of insider trading and market manipulation connected to the May 2022 collapse of TerraUSD (UST) and Terra (LUNA), events that erased roughly $40 billion in market value during a period of extreme volatility across the broader crypto price index.

Court filings allege Jane Street gained access to material non-public information from Terraform insiders through both formal and informal communication channels. The complaint references a private chat channel allegedly referred to as “Bryce’s Secret,” described as a line of communication linking a former Terraform employee who later joined Jane Street with personnel at Terraform. According to the filing, that access enabled trading decisions made before critical liquidity moves became public.

Central to the case is a May 7, 2022 liquidity event involving the Curve 3pool. Terraform Labs withdrew 150 million UST from the pool, and the complaint states that less than ten minutes later a wallet allegedly tied to Jane Street withdrew approximately 85 million UST from the same pool. The estate claims the second withdrawal occurred before the initial liquidity reduction was publicly known, allowing Jane Street to position itself advantageously during the destabilization of UST’s dollar peg.

The lawsuit asserts that these trades accelerated a “death spiral” in UST and LUNA, intensifying liquidity stress and market panic as crypto price movements turned sharply negative. Plaintiffs allege the firm used its institutional trading capacity to “rig the market in its favor” while retail investors and counterparties faced mounting losses as LUNA’s crypto price collapsed and its coin market cap evaporated during the broader selloff tracked across crypto price index benchmarks.

Beyond the Curve episode, the complaint alleges Jane Street continued executing trades informed by confidential insight as the Terra crisis unfolded. Filing documents contend the firm maintained longstanding trading relationships with Terraform Labs and expanded engagement in early 2022. Pratt’s prior role as a Terraform intern is cited as a factor that allegedly facilitated ongoing communications and access to internal discussions relevant to liquidity management decisions.

The estate seeks damages, disgorgement of alleged profits and interest, and a jury trial. Specific damages figures remain redacted in the publicly available complaint. The action follows a December 2025 lawsuit brought by the same administrator against Jump Trading, which included a $4 billion claim tied to alleged market manipulation and secret arrangements related to the Terra ecosystem.

Jane Street has denied wrongdoing, describing the lawsuit as “desperate,” “baseless,” and “opportunistic.” The firm maintains that losses stemmed from Terraform’s internal fraud and flawed protocol design rather than external trading conduct. Reporting notes that Jane Street established crypto trading operations in late 2017 and operated the JCX platform before withdrawing from U.S. crypto trading in 2023, while retaining stakes linked to Kraken’s $500 million funding round and Bitcoin mining companies.

Terra’s collapse in May 2022 triggered a wave of bankruptcies across the digital asset sector, including Three Arrows Capital, Voyager Digital, and FTX. Terraform Labs filed for bankruptcy in January 2024. Founder Do Kwon later pleaded guilty to fraud and received a 15-year prison sentence in 2025, according to court records.

This article has been refined and enhanced by ChatGPT.