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Jane Street Accused of Intentionally Attacking Terra

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Jane Street Accused of Intentionally Attacking Terra

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.

LUNC Chart – CoinGecko

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).

Entities Offering Crypto Derivatives Likely Fall under Specific Rules: ESMA

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Entities Offering Crypto Derivatives Likely Fall under Specific Rules: ESMA

The European Securities and Markets Authority (ESMA), the financial markets regulator and supervisor in the European Union, issued a notice to remind entities to assess investment vehicles providing leverage exposure to cryptocurrencies.

In a Tuesday notice, ESMA said that derivatives products, including those marketed as “perpetual futures or perpetual contracts” tied to cryptocurrencies like Bitcoin (BTC) or Ether (ETH), likely fell within the scope of intervention measures applied to contracts for differences, or CFDs. The EU Authority warned companies to “take appropriate steps to identify, prevent, or manage conflicts of interest that may arise from the offering of these products.”

“Where these derivatives meet the definition of a CFD, they are subject to the applicable product intervention requirements, including leverage limits, a mandatory risk warning, a margin close-out and negative balance protection, and the prohibition of monetary and non-monetary benefits,” said ESMA.

Source: ESMA

The EU agency, which tracks compliance with the region’s Markets in Crypto Assets (MiCA) framework, was established in 2011 as part of oversight into investor protection in financial markets. ESMA has issued similar warnings to entities tied to digital assets, including a January publication targeting financial influencers potentially promoting “volatile cryptocurrencies.”

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Bill Hughes, senior counsel and director of global regulatory matters at Consensys, responded to the ESMA notice on X:

“[T]he statement clearly broadcasts that European authorities are closely watching the leveraged crypto-derivatives space. Rebranding a product as a ‘perpetual future’ will not insulate it from CFD restrictions if its characteristics match the definition […] Firms offering leveraged derivatives to retail clients in the EU must revisit their product analysis, distribution strategies, and governance frameworks — or EU regulators will do it for them.”

Kraken announces “perpetual futures” product amid ESMA notice

Although not specifically targeting EU markets under MiCA, cryptocurrency exchange Kraken announced on Tuesday that it had listed “perpetual futures tracking tokenized versions” of “major equity indices, gold-backed ETFs, and leading public companies.”

The products will be available to residents of more than 110 countries outside the US. However, a Kraken spokesperson told Cointelegraph that the product is “not available to EU clients at launch.”

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