Jane Street Seeks Dismissal in Terraform Lawsuit Over Terra Crash

Jane Street asks court to dismiss Terraform Labs lawsuit, denying insider trading claims linked to TerraUSD and LUNA collapse events.

A major legal dispute has emerged in the crypto market after Jane Street challenged serious allegations. Jane Street has moved to dismiss Terraform Labs’ lawsuit. But the lawsuit is about the collapse of TerraUSD and LUNA, resulting in substantial losses.

Jane Street Rejects Claims and Blames Terraform Leadership

Jane Street claimed that the case is baseless and seeks to blame others. Further, it claimed that Terraform was responsible for the crash. Therefore, it requested that the court not proceed with the case.

The bankruptcy administrator, Todd Snyder, brought the lawsuit in February 2026. Moreover, Terraform claimed Jane Street engaged in insider trading and market manipulation. As a result, it alleged the company used insider information to close out positions ahead of the crash.

But Jane Street denied these claims in its court filing. It claimed its largest trades were made after the information was publicly available. Therefore, it claimed it did not use any hidden information.

In addition, Jane Street cited comments from Terraform founder Do Kwon. He had previously taken responsibility for the crash and losses. In fact, Do Kwon pleaded guilty to conspiracy and wire fraud and was sentenced to 15 years in prison.

The law firm also called the lawsuit contradictory based on Terraform’s allegations. For instance, it pointed out that a significant trade took place 10 minutes after the information became public. Thus, it claimed, it undermines claims of insider trading.

Disputed Trades and Legal Arguments Take Center Stage

The complaint states that Terraform claimed Jane Street used insider information. In particular, it alleged a former intern disclosed confidential information on liquidity. This allowed the firm to move to protect its position.

The lawsuit also outlined an incident on May 7, 2022. Terraform allegedly withdrew $150 million from a liquidity pool without announcing it. A Jane Street-associated wallet then withdrew $85 million in TerraUSD.

And Terraform claimed these moves led to panic selling. As a result, the ecosystem imploded and wiped out almost $40 billion in value. The complaint implied Jane Street saved more than $200 million in losses from these actions.

Jane Street has put forward a number of arguments to dismiss the case. It invoked the Wagoner Rule, which restrains lawsuits related to corporate misconduct. Therefore, it claimed Terraform cannot sue for losses resulting from its own conduct.

Further, Jane Street challenged the court’s jurisdiction. It claimed Terraform did not demonstrate that the trades took place in the US. Therefore, it claimed the case should not be brought in the US.

Meanwhile, this case continues to make waves in financial markets. It raises issues about responsibility and risk in cryptocurrency markets. In turn, the court’s ruling may impact future disputes over market practices and platform liability.

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