Jane Street Accused of Using Inside Knowledge to Exit Terra (LUNA) Before $40B Collapse

Key Points

• Court documents claim Jane Street traders referenced having an “informational advantage” before liquidating $192 million worth of TerraUSD (UST) during May 2022.
• A former intern from Terraform named Bryce Pratt allegedly maintained a private Telegram channel dubbed “Bryce’s Secret” with Terraform employees, potentially providing Jane Street with privileged information.
• The trading firm purportedly liquidated its entire UST holdings within nine minutes of Terraform’s undisclosed $150 million withdrawal from a critical liquidity pool, subsequently generating approximately $134 million through short positions.
• Following the transactions, Jane Street personnel allegedly contemplated “decommissioning” their blockchain wallets after a crypto tracking company identified their on-chain activity.
• Jane Street reportedly extended an employment offer to Terraform’s research director five days after UST reached its nadir, with the individual commencing employment fourteen days thereafter.

Terraform Labs’ bankruptcy estate has lodged an amended complaint against prominent trading firm Jane Street, asserting the company exploited confidential information to liquidate $192 million in TerraUSD tokens before the algorithmic stablecoin’s catastrophic failure in May 2022.

https://twitter.com/BullTheoryio/status/2057428951337992623?s=20

The revised complaint, submitted to Manhattan’s federal courthouse, features significantly fewer redactions compared to the initial February 2026 submission. It introduces fresh evidence regarding internal correspondence, suspicious post-transaction conduct, and a previously concealed employment arrangement.

Private Communication Channel Revealed

Central to these accusations is Bryce Pratt, a former Terraform intern who transitioned to Jane Street in September 2021. Court documents indicate Pratt established a confidential Telegram group titled “Bryce’s Secret” during February 2022.

The channel allegedly counted [[LINK_START_0]]Terraform’s[[LINK_END_0]] business development chief and a principal software engineer among its participants. The estate contends Pratt leveraged this forum to obtain “defi info” concerning Terraform’s holdings, operational tactics, and liquidity requirements.

The legal filing asserts that in one internal conversation, traders were informed they ought to be “slightly pleased” regarding their “informational advantage.” The estate maintains this demonstrates Jane Street recognized it was accessing material non-public intelligence, rather than simply conducting superior market research.

Critical Nine-Minute Trading Sequence

On May 7, 2022, at precisely 5:44 PM Eastern Time, Terraform Labs discreetly extracted 150 million UST from the Curve 3pool, an essential liquidity platform for the stablecoin.

Fewer than nine minutes thereafter, a blockchain wallet now attributed in the complaint to Jane Street withdrew 85 million UST from the identical pool. The filing characterizes this as the most substantial single transaction in the chain of events that destabilized UST from its dollar peg.

Cumulatively, Jane Street liquidated approximately 192 million UST tokens at near-parity value. The firm subsequently established short positions as the algorithmic stablecoin disintegrated. Per the estate’s calculations, Jane Street realized roughly $134 million in gains while Terra’s $40 billion ecosystem imploded during subsequent days.

Wallet Abandonment Strategy

Following the transactions, a cryptocurrency analytics company allegedly reached out to a Jane Street representative and observed the firm had “made a killing” on Terra’s implosion.

Internal messages referenced in the complaint reveal Jane Street traders became concerned about their wallets being traced on blockchain networks. They purportedly explored methods to “decommission” the wallets — effectively abandoning the connected addresses and establishing fresh ones to regain anonymity.

The estate contends this response indicates consciousness of wrongdoing. It maintains traders operating legitimately would not have reacted with alarm regarding wallet identification.

Strategic Recruitment

Five days following UST’s lowest valuation, on May 18, 2022, Jane Street allegedly tendered an employment offer to Terraform’s research director. He reportedly began his position two weeks subsequently.

The estate portrays this recruitment as component of a systematic effort to develop relationships with Terraform personnel, complementing Pratt’s previous internship and the Telegram communication channel.

Jane Street Refutes All Claims

Jane Street has categorically rejected the allegations. In its April 2026 dismissal motion, the company characterized the lawsuit as a “transparent attempt to extract money.” It contended that damages resulted from Do Kwon’s fraudulent activities, not its trading operations, and that the Wagoner Rule shields it from bankruptcy estate litigation.

The amended filing now references both federal securities regulations and the Commodity Exchange Act, expanding potential exposure. The dismissal motion remains under judicial consideration. This litigation proceeds concurrently with a distinct $4 billion complaint filed against Jump Trading in December 2025 for allegedly supporting UST before withdrawing assistance.

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