Jane Street accused of insider trading, is the truth behind the LUNA collapse about to be revealed?

In February 2026, the nearly four-year silence in the crypto market was broken once again by a lawsuit. One of the world’s most mysterious and profitable quantitative trading giants, Jane Street, was officially accused of insider trading, becoming one of the behind-the-scenes drivers of the $40 billion Luna collapse in 2022. This lawsuit not only exposed the true nature of market-making firms operating in a “gray area,” but also prompted the entire industry to reevaluate: who truly holds the power to set prices in the crypto world?

The Gray Trading of the Mysterious Giant: Jane Street’s “Secret Chat”

According to a lawsuit filed by Todd Snyder, the bankruptcy estate administrator of Terraform Labs, on February 23, 2026, in the Manhattan Federal Court, Jane Street is accused of using non-public information to execute “front-running” trades, accelerating the collapse of the Terra ecosystem.

The lawsuit revealed a private chat group called “Bryce’s Secret.” Bryce Pratt, an employee of Jane Street who interned at Terraform, used this connection after leaving to establish a secret communication channel with former colleagues. Through these “backdoors,” Jane Street gained access to significant non-public financial information about Terraform.

A key turning point occurred on May 7, 2022. At 5:44 PM that afternoon, Terraform Labs withdrew 150 million UST from Curve’s 3pool without publicly announcing it. Just ten minutes later, a wallet allegedly linked to Jane Street also withdrew 85 million UST — the largest single swap in the pool’s history. This operation was accused of using insider information to manipulate the market, directly triggering a sharp sell-off of UST, which plummeted to $0.42 over the following days, with Luna nearly hitting zero.

The “Original Sin” of Profit Machines: From Jump to Jane Street’s Suspected Role

Jane Street is not the only giant facing accusations. Just two months before this lawsuit, Terraform’s bankruptcy estate filed a $4 billion lawsuit against another high-frequency trading firm, Jump Trading. The complaint states that Jump secretly intervened to support the peg when UST first decoupled in 2021, acquiring over 61 million Luna tokens at a “discounted” price of $0.40 each, later profiting approximately $1.28 billion. On the eve of the 2022 crash, Terraform even transferred nearly 50,000 Bitcoin (about $1.5 billion) to Jump for “market support,” though the whereabouts of these Bitcoins remain unknown.

This has positioned Jane Street and Jump Trading as the two main “puppeteers” behind this financial tsunami. Interestingly, the lawsuit also hints that some of Jane Street’s insider information was obtained through Jump’s channels, revealing a covert web of interests between the two giants beneath the ruins of Terra.

The Present of LUNA and UST: On the Ruins of 2026

Returning to the market on February 25, 2026, the Terra Classic ecosystem still struggles amid the wreckage. According to the latest data from Gate.io:

• LUNC (Terra Classic) is trading at approximately $0.0000355, with a 24-hour trading volume in the tens of millions of dollars. Although slightly recovered from the dust of the crash, it remains a far cry from the all-time high of over $116 in April 2022.
• USTC (TerraClassic USD) hovers around $0.0048, having long lost its peg to the dollar.

Behind these cold numbers lies the painful reality of hundreds of billions of dollars vanishing into thin air.

Market Makers’ Boundaries: Saviors of Liquidity or Predators?

In response to accusations of “insider trading” and “market manipulation,” a Jane Street spokesperson told the media that these claims are “desperate lawsuits” and “an attempt at transparent profiteering,” emphasizing that investors’ losses stem from Do Kwon and his team’s “billions of dollars in fraud.”

Legally, this response is understandable. Do Kwon was indeed sentenced to 15 years in prison for fraud, and Terraform paid a $4.47 billion fine to the SEC.

However, legal “guilt” or “innocence” does not fully resolve moral questions within the industry. As ChainCatcher commented: “A building has structural flaws — that’s a fact. During its collapse, did someone sneak in and steal the most valuable things before the firefighters arrived?”

High-frequency trading firms’ business models rely on speed and informational advantage. As authorized participants in Bitcoin ETFs and core market makers on major exchanges, Jane Street’s routine sell-offs during U.S. stock market hours have long been criticized. When this advantage shifts from “interpreting public data” to “exploiting non-public information,” it crosses from “mathematically skilled” into “suspected criminal activity.”

Conclusion

With on-chain investigators like ZachXBT hinting at upcoming major investigations into the “most profitable” institutions in crypto, the case of Jane Street and Jump Trading may just be the beginning. For ordinary investors trading on platforms like Gate.io, this event is a stark reminder: in a market that claims to be decentralized and transparent, true inequality has never disappeared. The algorithms of quant giants, the secret weapons of market makers, and the information hidden in “secret chats” may ultimately determine the market’s direction.

Until the full truth emerges, staying cautious and respecting the market remains the first rule of survival.