In May 2022, $40 billion vanished in just 72 hours.
This was the most catastrophic crash in crypto history. UST, once considered the “crown jewel of algorithmic stablecoins,” plummeted from $1 to worthless within days. Luna, whose market cap approached $40 billion, fell from a high of $116 to nearly zero.
Millions of everyday investors lost their savings that early summer. They kept refreshing their screens, watching the plunging candlestick chart, unable to understand what was happening or what to do next.
The official explanation came swiftly: flawed algorithm design, Do Kwon lied, and the market collapsed naturally. Most accepted this answer, filed the disaster as “another lesson in crypto,” and moved forward.
This explanation held for almost four years.
On February 23, 2026, Terraform Labs’ bankruptcy liquidator, Todd Snyder, filed a lawsuit in Manhattan federal court. The world’s most secretive and profitable quantitative trading giant, Jane Street, was thrust into the spotlight.
The question that lingered in silence for four years finally received a new answer.
Jane Street and LUNA’s Secret Group Chat
To understand the significance of these allegations, you first need to know who the defendant is.
For most crypto users, Jane Street may be an unfamiliar name. But on Wall Street, it’s legendary—a firm that deliberately keeps a low profile, yet quietly became one of the most influential players in global financial markets.
Between 1999 and 2000, Tim Reynolds, Robert Granieri, and Michael Jenkins—former Susquehanna traders—along with IBM developer Marc Gerstein, founded Jane Street in a small, windowless office in New York. They started with ADR arbitrage, barely noticeable and ignored by most. But soon they targeted ETFs, which were niche at the time, and made them their core focus.
This bet changed everything.
Today, Jane Street is among the world’s largest market makers, operating in 45 countries and over 200 trading venues. The firm controls about 24% of the US-listed ETF primary market, with monthly equity trading volume reaching $2 trillion. In 2024, net trading income totaled $20.5 billion, surpassing Bank of America and matching Goldman Sachs. In Q2 2025, Jane Street set a quarterly record with $10.1 billion in net trading income and $6.9 billion in net profit, breaking all major Wall Street investment bank records.
With 3,000 employees, no CEO, no traditional hierarchy, and compensation distributed based on overall company profit, Jane Street describes itself as “a collection of puzzle solvers.” Outsiders call it an “anarchist commune”—flat, mysterious, and nearly entirely closed to the media.
Its alumni include a familiar figure: SBF. After graduating from MIT in 2014, he joined Jane Street, honed his trading instincts for three years, and left in 2017 to establish Alameda Research and FTX. The people shaped by this company profoundly changed the crypto world in every sense.
Now, the firm known for its “discretion, precision, and always being on the information advantage” faces the defendant’s bench.
The core of the allegations centers on a private group chat called “Bryce’s Secret.”
The group was created by Jane Street employee Bryce Pratt. He had previously interned at Terraform, then joined Jane Street, but kept his old connections active on both sides.
In February 2022, Pratt invited his former colleagues into this private channel, establishing an information pipeline between Terraform’s internal team and Jane Street, with Terraform’s software engineers and business development leads on the other end. The complaint alleges that through this channel, Jane Street learned in advance of Terraform’s plan to quietly withdraw funds from the Curve liquidity pool—a decision not yet disclosed to the public.
At 5:44 PM on May 7, ten minutes after Terraform Labs quietly withdrew $150 million UST from Curve’s 3pool, a wallet allegedly linked to Jane Street followed by withdrawing $85 million UST—the largest single transaction in the pool’s history.
By May 9, UST had dropped to $0.80, and signs of collapse were impossible to ignore. Pratt messaged Do Kwon and the Terraform team via the group chat, suggesting Jane Street could consider “purchasing Luna at a deep discount.”
As retail investors were wiped out, they were preparing to pick up assets amid the chaos.
The named defendants include, besides Pratt, Jane Street co-founder Robert Granieri—the only one of the four founders still employed—and employee Michael Huang. The complaint cites the Commodity Exchange Act and Securities Exchange Act, alleging fraud and unjust enrichment, demanding a jury trial, compensation, and disgorgement of profits.
Bloomberg quoted the complaint’s core statement: Jane Street’s actions allowed it “to close out hundreds of millions of dollars in potential risk exposure at the right moment, just hours before the Terraform ecosystem collapsed.”
Jump Trading and Deeper Darkness
The Jane Street lawsuit is not an isolated event. Two months earlier, the same liquidator, Todd Snyder, sued Jump Trading and its co-founder William DiSomma and former Jump Crypto president Kanav Kariya in Illinois federal court, seeking $4 billion in damages.
Jump’s story, in some ways, is even more shocking than Jane Street’s.
The complaint reveals a picture never fully assembled before: As early as May 2021, during UST’s first depegging crisis, Jump secretly bought about $20 million UST, restoring the price to $1.
Later, the public believed the algorithmic stablecoin narrative—the algorithm worked, the system was self-healing. Terraform escaped regulatory scrutiny, and in exchange, Jump acquired over 61 million Luna tokens at $0.40 each, while the market price was around $90—a discount of more than 99%. Jump later sold these tokens, with the complaint estimating profits of about $1.28 billion.
During the final collapse in May 2022, Luna Foundation Guard transferred nearly 50,000 BTC (about $1.5 billion) to Jump without a written agreement, ostensibly for market support. The ultimate destination of the Bitcoin remains unconfirmed; the complaint states: “Whether Jump further profited from this is unclear.”
Notably, DiSomma and Kariya invoked the Fifth Amendment hundreds of times during prior SEC inquiries, refusing to answer. Jump’s subsidiary Tai Mo Shan settled with the SEC for $123 million in 2024, admitting to “misleading investors.” Kariya resigned as Jump Crypto president in the same year, citing a CFTC investigation.
More crucially, according to statements in the Jane Street complaint, it was through Jump’s information channels that Jane Street obtained some “non-public key information.” The two cases are connected by an invisible thread.
But there’s another side to this story.
Jane Street’s response was direct: This is a “desperate lawsuit,” a “transparent attempt to extract money from the company.” They added that Terra and Luna investors’ losses were caused by “billions of dollars in fraud perpetrated by Do Kwon and Terraform management,” which they will vigorously contest.
This statement is accurate. Do Kwon admitted to fraud and was sentenced to 15 years in prison; Terraform paid $4.47 billion in fines. Luna’s death spiral was inevitable by design: Algorithmic stablecoins are fundamentally systems that require continuous buying and sustained confidence. Once panic triggers, the arbitrage mechanism operates in reverse, destroying itself at an exponential rate.
But “Do Kwon is guilty” and “others are innocent” are not mutually exclusive.
A building with fatal structural flaws—that’s a fact. Whether anyone secretly emptied its most valuable contents before the firefighters arrived during its collapse is another distinct legal and ethical issue.
Another detail deserves attention. On the same day the Jane Street lawsuit was revealed, on-chain researcher ZachXBT announced a major investigation to be released on February 26, 2026, targeting “the most profitable institution in the crypto industry, whose staff have long used internal data for insider trading.” He didn’t name names, but the timing made all of crypto Twitter hold its breath in anticipation.
This story isn’t over. But one thing is certain: In the crypto market that claims to be “decentralized,” true asymmetry never disappeared—it simply moved from bank trading desks to the backend of smart contracts, continuing in a more concealed form.
The Luna incident may have been the most violent tear in that fissure, and those on the other side had already safely exited before the walls fell.
“The gentry’s money is fully returned, the commoners’ money is split three to seven”—as in the movies, so it is in the crypto world.
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