The lawsuit represents the second major market maker targeted after the $4 billion case against Jump Trading filed in December 2025.
A lawsuit was dropped on Feb. 23, targeting Jane Street over what happened back in May 2022 with Terra. Terraform Labs bankruptcy administrator Todd Snyder filed in Manhattan federal court, accusing the Wall Street firm of insider trading during Terra’s $40 billion implosion in today’s biggest crypto news bit.
The smoking gun? Jane Street pulled $85 million in UST out of Curve pool less than 10 minutes after Terraform yanked its own $150 million. That timing looks suspicious. This marks the second big market maker getting sued after Jump Trading caught a $4 billion case last December.
Terraform’s bankruptcy team has been hunting down firms that made money while everyone else got destroyed in May 2022. Jump Trading already faces $4 billion in claims over alleged manipulation. Jane Street is next.
Investigators spent four years digging through blockchain wallet data and private messages to build the case.
Court documents say Jane Street got insider tips through private chats with Terraform employees. A former intern allegedly leaked details about internal plans and liquidity moves. This supposedly gave Jane Street knowledge that regular traders never had. They could position exits while retail investors stayed trapped.
Jane Street ran major liquidity operations in crypto, especially for stablecoin pairs on Curve. The firm brought Wall Street quantitative trading and high-frequency systems into decentralized exchanges. That put them in powerful positions, controlling significant UST trading pools.
Prosecutors claim they mixed this market power with alleged inside information to bank hundreds of millions while retail accounts went to zero.
May 7, 2022, was the day UST started breaking. Terraform pulled roughly 150 million UST from Curve’s main pool that morning, draining crucial support that kept the $1 peg stable. 10 minutes later, a Jane Street wallet allegedly moved 85 million UST out of the same pool.
How did they know? Regular traders had no warning that Terraform was pulling liquidity. The 10-minute gap raises obvious questions about who told Jane Street what was coming. Court filings point to this as classic front-running with material non-public information.
Two huge withdrawals minutes apart crushed the Curve pool. Panic hit immediately. Everyone rushed for the exits. UST broke its dollar peg and never came back.
The algorithm, supposed to fix this through LUNA minting, went haywire instead. LUNA hyperinflated from $80-plus to basically nothing in days. Forty to fifty billion dollars vanished. Retail holders lost everything. Jane Street allegedly got out clean with massive profits.
Building this case took years. Terraform Labs filed for Chapter 11 bankruptcy in early 2024 after founder Do Kwon got arrested, extradited, and convicted of fraud. Courts appointed Todd Snyder to liquidate assets and chase recoveries for people who lost billions.
Snyder’s investigators worked through 2024 and 2025, tracking wallet flows and checking who profited most. They pulled chat logs. They interviewed insiders. And they even identified alleged information sharing between Terraform employees and Jane Street traders.
Evidence piled up slowly before filing hit the statute of limitations deadline in February 2026.
Jane Street calls the whole thing baseless. They say it’s a desperate money grab. Their story blames Do Kwon’s broken algorithmic design for the disaster. They claim legitimate market making with normal risk management, not insider cheating. Courts will decide whether prosecutors can prove Jane Street actually got tips, rather than just reading markets better than others.
This crypto news case matters beyond just this one firm. It tests whether traditional insider trading rules work in decentralized finance. Successful prosecution would mean Wall Street players face real accountability, even trading on blockchain protocols without central control.
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