Jane Street slams Terraform's "blame-shifting": Do Kwon has been sentenced to 15 years, the collapse was caused by your own fraud

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On April 24, 2026, Jane Street filed a motion to dismiss in Manhattan federal court, pushing back against the insider trading lawsuit brought by the Terraform bankruptcy estate. Jane Street characterized the litigation as an attempt to "make innocent parties pay for Terraform’s own fraud," citing the final judgment against Do Kwon, who was sentenced to 15 years in prison, to argue that legal responsibility for the collapse of the Terra ecosystem has already been established. The motion to dismiss seeks a ruling "with prejudice," meaning the case would be permanently closed, leaving Terraform bankruptcy trustee Todd Snyder with no opportunity to refile. Jane Street has taken a firm stance. On April 24, 2026, the global high-frequency trading firm submitted its filing to the U.S. District Court for the Southern District of New York (SDNY). In the motion, Jane Street stated: "Terraform now claims to be a victim of Jane Street’s trading activities. There is a fundamental flaw in this theory—Terraform’s fraudulent scheme has already been investigated, prosecuted, and punished, and Jane Street had no connection to that fraud." The first and most critical of Jane Street’s three primary defenses is that the criminal liability for the Terra ecosystem collapse is already settled. Do Kwon has pleaded guilty to conspiracy and wire fraud and was sentenced to 15 years in federal prison. The court has already ruled that the May 2022 de-pegging of UST, the collapse of LUNA to zero, and the evaporation of approximately $40 billion in market value were caused by internal fraud at Terraform, not by the trading decisions of external market makers. In its motion, Jane Street bluntly pointed out that Terraform is walking into court "trying to extract cash from Jane Street to cover the losses from a fraud that Terraform itself inflicted on the market." Jane Street’s second line of defense targets the timeline of Terraform’s complaint, rendering the plaintiff's claims "self-defeating." The core of Terraform’s insider trading allegation is that Jane Street obtained material non-public information (MNPI) from Terraform insiders and exited the market before the public was aware. However, Jane Street countered in its motion that the largest TerraUSD sell-off cited by Terraform occurred "a full 10 minutes after the alleged MNPI had already been made public." In other words, if Jane Street had truly possessed inside information and exited early, that sell order should have occurred before the information was public—but according to Terraform’s own account, the largest sell-off happened 10 minutes later, meaning the market was already informed. The logic fails, and the accusation contradicts itself. Jane Street added that investors "could see the public signs of the collapse," and that the firm was simply "selling off a deteriorating investment as the market was clearly collapsing." Jane Street’s third line of defense is equally sharp. In its complaint, Terraform alleged that Jane Street used "back-channel communications" to learn the timing of Terraform’s switch to a new liquidity pool, allowing them to position themselves for an early exit. However, Jane Street noted in its motion: "The plaintiff claims 'upon information and belief' that Jane Street learned of the timing through 'back-channel communications,' yet they have failed to identify a single communication record revealing that timing—despite extensive pre-suit discovery." Pre-suit discovery is typically a rigorous process of document review. Having gone through this process, Terraform still cannot produce any concrete communication records, which Jane Street argues renders the entire "insider theory" baseless. Furthermore, Jane Street invoked the "Wagoner rule" under bankruptcy law, which prevents a bankruptcy trustee from suing third parties on behalf of a bankrupt company to recover losses caused by the "company’s own fraud." This rule itself serves as a barrier to claims like those brought by Todd Snyder. This lawsuit is not an isolated incident. In February 2026, bankruptcy trustee Todd Snyder sued Jane Street on behalf of Terraform, naming co-founder Robert Granieri and employees Bryce Pratt and Michael Huang as defendants, alleging that the four individuals traded Terra tokens after obtaining non-public information from "Terraform insiders," causing losses to Terraform. However, before Jane Street, another market maker had already walked this path: Jump Trading. Terraform also sued Jump Trading for $4 billion, alleging involvement in abnormal trading prior to the Terra ecosystem collapse. Jump Trading’s response was identical to Jane Street’s—a direct counter-attack, accusing Terraform of shifting SEC regulatory pressure onto innocent market participants and attempting to use civil litigation to deflect responsibility for its own fraudulent actions. Bloomberg noted that Jane Street has faced several controversies in the crypto market: questions surrounding its status as the largest holder of silver ETFs, allegations of "dumping" Bitcoin at 10:00 AM daily, and now this insider trading lawsuit,

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2026-04-24

Jane Street asks US court to toss Terraform’s insider trading suit

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Published:2026-04-24 05:43:35

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