Terraform Labs is suing quantitative trading firm Jane Street for its role in the collapse of the Terra ecosystem.
Terraform Labs’ estate has filed a lawsuit against quantitative trading firm Jane Street, alleging that the firm abused insider knowledge to profit from Terra and that it inadvertently contributed to the downfall of the ecosystem.
“In this case, however, Jane Street Capital and its traders exploited the public’s participation in crypto markets and contributed to the collapse of Terraform’s cryptocurrency ecosystem. They did so by misappropriating confidential information and manipulating market prices,” the suit reads.
The filing is heavily redacted, but focuses on a move related to the UST Curve 3pool. Per Snyder, Terraform withdrew $150 million of UST from the pool, a move that “was not publicly announced,” to deploy it to 4pool in the coming week.
Nine minutes later, Jane Street allegedly made its “first and only sale of UST in that pool,” selling $85 million of UST in a single transaction.
Snyder says that the swap directly led to a steep selloff in UST that resulted in Terra’s subsequent death spiral, and accuses Jane Street of using its connections with Terraform Labs to “maximize its own profits and avoid losses suffered by other investors who did not have this confidential information.”
Following the UST depeg, LUNA, now LUNC, plummeted from a $29 billion market capitalization to nearly zero in a matter of days, after reaching as high as $41 billion in April 2022.
In December, Terra founder Do Kwon was sentenced to 15 years in prison, a sentence that exceeded the Department of Justice’s 12-year target, after Kwon pleaded guilty to fraud charges in August 2025.
Jane Street is one of the largest quantitative firms in traditional finance and crypto, with more than $650 billion in assets under management (AUM).
