Jane Street Sued For Crypto Insider Trading That Accelerated Terraform Collapse

For years – literally – we have been pounding the table and pointing out market rigging and manipulation irregularities in the crypto markets which, for reasons of our own, we attributed to one of the world’s foremost HFT shops and most profitable “market makers” in the world (if not India), Jane Street. Below is an example from 2023, and here are hundreds of others…

Jane Street is going to frontrun so many bitcoin ETF orders, SBF would have made trillionaire if he had only stayed there. And it would have been all legal…

— zerohedge (@zerohedge) December 29, 2023

As it turns out someone noticed.

Jane Street was sued for alleged insider trading by the administrator winding up the affairs of Terraform Labs, the firm whose $40 billion collapse in 2022 roiled the crypto markets, contributed to the collapse of FTX and sparked a brutal crypto winter which culminated with the bankruptcy and prison sentence of Sam Bankman Fried.. who just happens to be a former Jane Street employee (along with his polycule partner Caroline Ellison) and the man many claim devised some of the most intricate crypto manipulation schemes operating to this day. 

Jane Street used “non-public information to front-run trading that hastened the collapse of Terraform,” Todd Snyder, a bankruptcy court-appointed administrator and co-head of the Piper Sander Restructuring group, claimed in a redacted complaint filed Monday in Manhattan federal court. Illegally using this information allowed Jane Street “to unwind hundreds of millions of dollars in potential exposure at precisely the right time, mere hours before the Terraform ecosystem collapsed.”

For those lucky enough not to remember, Terraform imploded when its stablecoin TerraUSD lost its peg to the US dollar, leading to the collapse of its sister token, Luna. The failure set off a chain reaction across the crypto industry, ultimately sending bitcoin plunging below $20,000. Terraform co-founder, Do Kwon, who was recently sentenced to 15 years in prison, deceived investors about the stability of TerraUSD, which was said to be algorithmically “pegged” to the US dollar. Kwon pleaded guilty to fraud and was sentenced in December to 15 years in prison by a New York judge who called his crime “a fraud of epic generational scale.” 

Terraform filed for bankruptcy in January 2024 and a wind down trust was formally established later that year. 

Snyder was tapped to administer a trust to maximize the recovery for Terraform’s investors and creditors and to close out its operations. As part of his work, Snyder made a stark realization, one which we were aware of all along: “Jane Street abused market relationships to rig the market in its favor during one of the most consequential events in crypto history.”  

“On behalf of injured parties, we will pursue all avenues supported by the facts and the law against those who exploited their position and reaped substantial profits at the expense of Terraform Labs’ creditors,” Snyder said and is now seeking damages from Jane Street, its co-founder Robert Granieri, and employees Bryce Pratt and Michael Huang.

Here are some of the shocking details that the lawsuit revealed:

By late 2018, Jane Street had signed up to trade directly with Terraform but its trading in Terraform’s tokens didn’t take off until February 2022, when Jane Street sent Bryce Pratt, a former intern at Terraform, to establish lines of communication with his former Terraform colleagues. 

Among Pratt’s communications with Terraform was a group chat he set up with his former colleagues, including a software engineer and the head of business development at Terraform. The group named the chat “Bryce’s Secret” and used it as a way to channel Terraform-related information back to Jane Street.

After Pratt started an email chain to introduce Terraform’s head of business development and Jane Street’s “DeFi” leaders, the parties began regularly communicating and discussing a potential Jane Street investment in Terraform, the lawsuit said. But Jane Street turned those communications into a back-channel source for material nonpublic information about Terraform and later used the confidential information it learned to pursue trades to maximize profits for itself.

Specifically, on May 7, 2022, at 5:44 p.m. EST, Terraform withdrew 150 million TerraUSD from the Curve3pool, a liquidity pool where stablecoins could be exchanged one for the other. 

Less than 10 minutes after Terraform’s withdrawal, which hadn’t been publicly announced to the market, a crypto wallet that some analysts have linked to Jane Street withdrew 85 million of TerraUSD from the same liquidity pool, the complaint alleges.

The next day, Kwon said publicly that the 150 million withdrawal was meant to move TerraUSD to a new liquidity pool for stablecoins. However, the exact timing of activities associated with the new liquidity pool, including any withdrawals from the Curve3pool, wasn’t public knowledge.

The trades accelerated the collapse of Terraform by adding selling pressure at a critical moment, while allowing Jane Street to profit (or avoid massive losses).

It didn’t end there, however, and after the May 7 trade, Jane Street continued to use confidential information, including what it learned from Jump Trading, to trade TerraUSD to reap more profits, the lawsuit said. 

On May 9, while TerraUSD was depegged but not fully collapsed, Pratt set up a group message with Kwon, Huang and others at Jane Street, expressing the firm’s interest in bidding on either bitcoin or the Luna token. Kwon responded that Bill DiSomma, co-founder of Jump, should have reached out to Jane Street to discuss a fundraise for Terraform.

Snyder’s lawsuit against Jane Street is part of a broader effort by the Terraform wind-down administrator to pursue parties allegedly involved in or profiting from the collapse. In December 2025, Snyder filed a separate $4 billion lawsuit against Jump Trading  - another giant HFT “market maker” – accusing it of market manipulation, self-dealing, and helping accelerate the Terra crash through similar alleged misconduct.

A Jane Street spokesperson told Bloomberg the suit “desperate” and “a transparent attempt to extract money.” We say that the revelation of market rigging and manipulation that will now emerge, will make everyone’s head spin. 

The case is Snyder v. Jane Street Group LLC, 26-cv-1504, US District Court, Southern District of New York

Jane Street Lawsuit by Zerohedge