Terraform Labs Liquidation Administrator Sues Jane Street Over Alleged Insider Trading

Lawsuit Alleges Insider Trading During Terra-Luna Collapse

Terraform Labs’ liquidation administrator, Todd Snyder, filed a complaint on Monday against Jane Street, its co-founder Robert Granieri, and employees Bryce Pratt and Michael Huang, according to a Wall Street Journal report cited in the complaint. Snyder alleges that Jane Street obtained non-public information from Terraform Labs insiders and used it to front-run trading activity during the unwinding of the Terra-Luna ecosystem.

Snyder claims Jane Street “abused market relationships to rig the market in its favor” during what he describes as one of the most consequential events in crypto history. He stated that his team intends to pursue all avenues against parties who allegedly exploited their positions for substantial profits at the expense of Terraform Labs’ creditors.

The complaint cites an instance on May 7, 2022, when Terraform Labs withdrew 150 million TerraUSD from the Curve3pool without public disclosure. Within 10 minutes, a wallet allegedly linked to Jane Street withdrew an additional 85 million TerraUSD from the same pool. The lawsuit contends that the timing and details of these withdrawals were not made public.

Role of Former Terraform Staff and Links to Jump Trading

According to the complaint, Jane Street sent employee and former Terraform Labs member Bryce Pratt to reestablish communication channels with his ex-colleagues at Terraform Labs, including a software engineer and the head of business development. Snyder alleges that a chat group involving these individuals was used to transmit Terraform-related, non-public information to Jane Street, which was then used for insider trading.

The filing also references Jump Trading, which Snyder previously sued in December, seeking $4 billion in damages over an alleged backdoor deal to inflate TerraUSD prior to its collapse. In the new complaint, Snyder claims that some non-public information reached Jane Street through Jump Trading. On May 9, 2022, amid the TerraUSD depeg, Pratt reportedly initiated a group message with Terraform founder Do Kwon and Jane Street representatives regarding potential bids on Luna or bitcoin. Kwon allegedly responded that Jump co-founder Bill DiSomma should already have contacted them about a Terraform fundraise.

Jane Street has disputed Snyder’s allegations, contending that the Terra-Luna collapse resulted from a multibillion-dollar fraud by Terraform’s management and characterizing the claims as opportunistic.

Terraform Labs’ algorithmic stablecoin TerraUSD depegged in 2022, triggering a death spiral with its sister token Luna that erased over $40 billion from the market and contributed to a wave of crypto lending bankruptcies. After unsuccessful revival attempts, Terraform filed for bankruptcy in 2024 and later agreed to pay $4.47 billion in penalties to the U.S. Securities and Exchange Commission. In December, Do Kwon was sentenced to 15 years in U.S. prison following a guilty plea to two criminal counts in August.

FAQ

Who has been sued in the latest Terraform Labs-related complaint?
The complaint was filed against Jane Street, its co-founder Robert Granieri, and employees Bryce Pratt and Michael Huang.

What conduct does the lawsuit allege against Jane Street?
The lawsuit alleges that Jane Street used non-public information obtained from Terraform Labs insiders to front-run trading, including large, undisclosed TerraUSD withdrawals from the Curve3pool in May 2022.

How has Jane Street responded to the allegations?
Jane Street has reportedly rejected the claims, asserting that Terra-Luna’s collapse was caused by a multibillion-dollar fraud by Terraform Labs’ management and stating that it will defend against the claims vigorously.

What is the broader context of Terraform Labs’ collapse?
Terraform’s algorithmic stablecoin TerraUSD depegged in 2022, collapsing alongside Luna and wiping out over $40 billion in market value, leading to significant contagion in the crypto lending sector, a 2024 bankruptcy filing, a $4.47 billion SEC penalty, and a 15-year U.S. prison sentence for founder Do Kwon.