 ▲ Terra Luna Classic (LUNC), Terraform Labs, and Jane Street / ChatGPT-generated image |
The bankruptcy trustee of Terraform Labs, the company that shook the global cryptocurrency market with the Terra-Luna collapse, has filed a massive damages lawsuit against Wall Street trading giant Jane Street, targeting what he claims is the hidden force behind the downfall.
According to crypto media outlet CoinGape on February 23 (local time), Todd Snyder, the court-appointed liquidator of Terraform Labs, filed a lawsuit in a New York federal court against Jane Street, its co-founder Robert Granieri, and former employees. Snyder alleges that Jane Street used non-public information obtained from Terraform insiders to secure illicit profits and that its aggressive trading activities accelerated the collapse of the Terra Luna Classic (LUNC) ecosystem.
The complaint states that Jane Street established a confidential communication channel through Bryce Pratt, a former Terraform Labs intern, gaining access to internal classified information. In particular, on May 7, 2022, less than ten minutes after Terraform Labs withdrew 150 million UST from the Curve liquidity pool, Jane Street allegedly withdrew 85 million UST, raising suspicions of front-running based on insider information.
Snyder emphasized that Jane Street was aware in advance of the vulnerabilities in the Terra Luna (LUNA) algorithmic stablecoin and exploited them to manipulate the market. He argues that the firm’s massive sell-off, driven by insider knowledge, fueled investor panic and ultimately triggered the so-called “death spiral” that wiped out $40 billion in assets. This lawsuit follows a separate $4 billion legal action recently filed by Terraform Labs against another trading firm, Jump Trading, marking the second major courtroom battle.
Terraform Labs has expressed strong determination to recover the substantial profits Jane Street allegedly gained through illegal insider trading and to secure funds to compensate affected investors. As evidence of covert ties between former CEO Do Kwon and certain trading firms continues to surface in court, the possibility is growing that the crisis—once attributed solely to an algorithmic flaw—may have involved coordinated market manipulation by major Wall Street players.
The cryptocurrency industry is closely watching the outcome of this lawsuit, viewing it as a potential milestone in determining regulatory responsibility and accountability for large trading firms. If the court recognizes the insider trading allegations against Jane Street, it could result in one of the largest compensation rulings in cryptocurrency history, as the bankrupt Terraform Labs estate vows to pursue accountability to the fullest extent.
Disclaimer: This article is for investment reference purposes only and we are not responsible for any investment losses incurred based on it. The content should be interpreted for informational purposes only.