Jane Street Faces Insider Trading Lawsuit by Terraform Administrator Over 2022 Ecosystem Collapse

Todd Snyder, the court-appointed administrator overseeing the bankruptcy liquidation of Terraform Labs, filed a lawsuit against Jane Street Group LLC on February 23, 2026, in Manhattan federal court, alleging the trading firm engaged in insider trading using non-public information obtained from Terraform insiders to front-run trades ahead of the $40 billion ecosystem collapse in May 2022.

The complaint names Jane Street, co-founder Robert Granieri, trader Michael Huang, and employee Bryce Pratt as defendants, alleging the firm unwound “hundreds of millions of dollars in potential exposure” hours before TerraUSD and Luna collapsed, while Jane Street has called the suit “desperate” and “a transparent attempt to extract money”.

Core Allegations and Legal Claims

The complaint, filed as *Snyder v. Jane Street Group LLC*, 26-cv-1504, in the US District Court for the Southern District of New York, alleges that Jane Street used confidential information from Terraform Labs insiders to execute trades that profited from and potentially accelerated the Terra ecosystem’s collapse.

According to court documents cited by multiple sources, the administrator claims Jane Street “abused market relationships to rig the market in its favor during one of the most consequential events in crypto history”. The lawsuit seeks damages for alleged insider trading and unjust enrichment, though the specific quantum of damages has not been publicly disclosed in the redacted complaint.

The legal action follows a similar lawsuit filed by Snyder against Jump Trading in December 2025, seeking $4 billion in damages for alleged market manipulation and self-dealing related to the Terra collapse.

Specific Trading Activity Alleged

The complaint identifies a specific transaction pattern on May 7, 2022, four days before TerraUSD’s final depeg, as evidence of alleged front-running.

According to the allegations, Terraform Labs withdrew 150 million TerraUSD from the Curve3pool liquidity pool without any public announcement. Within ten minutes of this withdrawal, a wallet allegedly linked to Jane Street withdrew an additional 85 million TerraUSD from the same liquidity pool. The lawsuit asserts that neither the timing nor the details of these withdrawals were publicly disclosed, suggesting the firm acted on non-public information.

The administrator claims Jane Street used this advance positioning to “unwind hundreds of millions of dollars in potential exposure at precisely the right time, mere hours before the Terraform ecosystem collapsed”.

Information Channels and Communication Networks

The complaint alleges Jane Street established dedicated communication channels with Terraform insiders to obtain confidential information about the firm’s liquidity decisions and market positions.

According to court documents cited by The Wall Street Journal and The Block, Jane Street deployed employee Bryce Pratt, a former Terraform Labs member, to reconnect with his former colleagues, including a Terraform software engineer and the head of business development. The lawsuit claims these communications formed a channel through which non-public information flowed from Terraform to Jane Street.

The complaint further alleges that some non-public information reached Jane Street through Jump Trading, which Snyder separately sued in December 2025.

Connection to May 2022 Communications

The lawsuit references a group message initiated by Pratt on May 9, 2022, during the active TerraUSD depeg, which included Do Kwon and Jane Street representatives. In that communication, Pratt expressed interest in bidding on Luna or Bitcoin, to which Kwon allegedly responded that Jump co-founder Bill DiSomma should have already contacted them regarding a Terraform fundraise.

This communication thread forms part of the administrator’s case that Jane Street maintained privileged access to Terraform’s internal crisis management discussions.

Defendant Responses and Legal Defense

Jane Street has publicly rejected the allegations through an official spokesperson statement. The firm characterized the lawsuit as “desperate” and “a transparent attempt to extract money,” adding that the company will defend itself “vigorously against these baseless, opportunistic claims”.

The trading firm’s defense centers on attribution of responsibility, with its spokesperson stating that “losses suffered by Terra and Luna holders were the result of a multi-billion dollar fraud perpetrated by the management of Terraform Labs”. This position aligns with the criminal conviction of Terraform co-founder Do Kwon, who pleaded guilty to fraud charges and was sentenced to 15 years in prison in December 2025.

Regulatory and Legal Context

The lawsuit operates within an established enforcement framework following the Terra collapse. The US Securities and Exchange Commission (SEC) previously secured a $4.47 billion settlement with Terraform Labs, and Do Kwon’s December 2025 sentencing concluded criminal proceedings against the founder.

Terraform Labs filed for bankruptcy protection in January 2024, and Snyder was subsequently appointed as plan administrator to maximize recovery for investors and creditors while winding down operations.

The case against Jane Street follows Snyder’s December 2025 lawsuit against Jump Trading in federal court in Chicago, which alleges that Jump “actively exploited” Terraform through manipulation, information concealment, and self-dealing. The Jump complaint alleges that firm entered secret agreements with Terraform since 2019, including allowing Jump to purchase LUNA at $0.40 when market prices reached $110, and that Jump artificially supported TerraUSD during a May 2021 depeg while concealing its role.

Broader Industry Implications

Legal observers suggest the case could establish significant precedents for insider liability in cryptocurrency markets. Andrew Rossow, public affairs attorney and CEO of AR Media Consulting, told Decrypt that the lawsuit “matters significantly, because the court isn’t just judging a trade anymore; it’s setting a precedent that ‘privileged access’ in DeFi is a legal liability, and not just a competitive advantage”.

The case may test application of misappropriation theory in crypto markets, where liability could attach to market makers obtaining confidential information from protocol teams and trading against the broader market, even without traditional corporate insider relationships. Under this framework, private communication channels could be treated as functionally equivalent to corporate boardrooms.

The Terra ecosystem collapse in May 2022 erased approximately $40 billion in market value and triggered contagion that contributed to failures across the crypto lending sector, including Three Arrows Capital, Celsius, and ultimately FTX later that year.

Frequently Asked Questions

What are the specific allegations against Jane Street in the Terraform lawsuit?

The lawsuit alleges Jane Street used non-public information obtained from Terraform Labs insiders to front-run trades ahead of the May 2022 ecosystem collapse. The complaint cites a specific instance on May 7, 2022, where Terraform withdrew 150 million TerraUSD from the Curve3pool without public announcement, and within ten minutes, a wallet allegedly linked to Jane Street withdrew 85 million TerraUSD from the same pool. The administrator claims this allowed Jane Street to unwind “hundreds of millions of dollars in potential exposure” hours before the collapse.

Who are the defendants named in the Jane Street lawsuit?

The complaint names Jane Street Group LLC as the primary defendant, along with co-founder Robert Granieri, trader Michael Huang, and employee Bryce Pratt. Pratt is a former Terraform Labs employee whom the lawsuit alleges established communication channels with former Terraform colleagues to obtain confidential information.

How does this lawsuit relate to previous legal actions against Jump Trading?

The Jane Street lawsuit follows a December 2025 lawsuit by the same administrator against Jump Trading seeking $4 billion in damages. The Jump complaint alleges that firm entered secret agreements with Terraform, artificially supported TerraUSD during a May 2021 depeg while concealing its role, and received nearly 50,000 Bitcoin from the Luna Foundation Guard without formal written agreements. The Jane Street complaint references Jump Trading, alleging that some non-public information reached Jane Street through Jump.