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Terraform Labs’ court-appointed administrator has accused quantitative trading firm Jane Street of using a private Telegram channel to gather insider information from Terraform employees before dumping a $192 million TerraUSD position just hours before the stablecoin lost its peg in May 2022, generating more than $134 million in profits as ordinary investors were wiped out.
According to the amended filing, Jane Street, alongside co-founder Robert Granieri and traders Bryce Pratt and Michael Huang, allegedly engaged in insider trading practices tied to Terraform’s ecosystem before the Terra collapse unfolded.
The complaint claims a private Telegram chat titled “Bryce’s Secret” was created in February 2022 and included former and current Terraform employees. Pratt, who reportedly interned at Terraform before joining Jane Street as a systems developer, allegedly used the channel to gather sensitive information about decentralized finance operations and internal developments.
One message referenced in the filing allegedly stated, “bro we all know who the buyer is. its where u work,” followed by the phrase “Jane Streeeeeeeet.”
Terraform’s legal team argues that the communication channel gave Jane Street an unfair advantage ahead of the Terra collapse, allowing the firm to strategically unwind positions while ordinary investors remained unaware of mounting instability within the ecosystem.
The amended filing builds upon a lawsuit first submitted earlier this year as Terraform’s bankruptcy estate seeks recoveries for creditors impacted by the Terra collapse.
One of the most explosive claims in the lawsuit centers around Jane Street’s alleged liquidation of a $192 million TerraUSD position on May 7, 2022.
According to the filing, the firm unstaked and sold the entire position while UST was still trading near its dollar peg, only hours before the Terra collapse accelerated across crypto markets.
Terraform further alleges that Jane Street later opened short positions against both UST and LUNA after learning about confidential rescue efforts designed to stabilize the ecosystem.
The complaint claims the trading activity generated more than $134 million in profits during the Terra collapse.
The filing also accuses Jane Street of attempting to reduce visibility into its transactions after the crash. Terraform alleged the firm decommissioned wallets tied to the trades after learning that onchain investigators had linked the activity to unusually profitable positioning during the Terra collapse.
Jane Street has strongly denied wrongdoing and previously moved to dismiss the original complaint in April.
A spokesperson for the firm told Decrypt that the lawsuit was an attempt to shift blame away from Terraform’s own management failures during the Terra collapse.
“This suit is a transparent attempt to extract money when it is well-established that the losses suffered by Terra and Luna holders were the result of a multi-billion dollar fraud perpetrated by the management of Terraform Labs,” the spokesperson said.
The company added that it intends to “defend ourselves vigorously against these baseless, opportunistic claims.”
The response highlights the increasingly aggressive legal battles tied to the Terra collapse, as multiple parties attempt to determine responsibility for one of the largest failures in crypto history.
Industry analysts say the lawsuit underscores how blockchain analytics are changing the way financial investigations unfold in digital asset markets.
Nic Puckrin, co-founder of Coin Bureau, told Decrypt that insider trading remains difficult to police in crypto because communication channels and market-making relationships have historically operated in gray areas.
Still, he noted that the Terra collapse also demonstrated one major advantage unique to blockchain systems: transparent transaction records.
“That level of visibility can make it much easier for investigators to trace flows of funds, trading patterns, and wallet activity,” Puckrin said.
The Terra collapse has become one of the clearest examples of how onchain evidence can later be used to reconstruct trading behavior during periods of market turmoil.
The Terra collapse began in May 2022 after algorithmic stablecoin TerraUSD lost its peg to the U.S. dollar, sending sister token LUNA into a historic death spiral.
Within days, LUNA crashed from prices above $60 to fractions of a cent, wiping out billions in investor capital and shaking confidence across the broader crypto market.
The Terra collapse quickly spread beyond Terraform Labs itself. Major firms including Celsius Network, Voyager Digital, and Three Arrows Capital later failed amid cascading liquidity problems tied to the broader market panic.
Many analysts still describe the Terra collapse as the event that triggered crypto’s prolonged 2022 bear market and ultimately contributed to the downfall of FTX later that year.
The incident also accelerated global regulatory discussions surrounding stablecoins, risk disclosures, and centralized influence within decentralized ecosystems.
Terraform Labs filed for Chapter 11 bankruptcy protection in January 2024 as the legal and financial fallout from the Terra collapse continued to intensify.
A wind-down trust was later established to pursue claims and recover assets on behalf of creditors affected by the implosion.
Meanwhile, Terraform co-founder Do Kwon was extradited from Montenegro to face charges in the United States. He later pleaded guilty to conspiracy and wire fraud charges connected to the Terra collapse and is currently serving a 15-year prison sentence.
The latest allegations against Jane Street now threaten to widen the circle of accountability tied to the Terra collapse, potentially drawing more attention toward how major trading firms operated during one of crypto’s darkest chapters.
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