- Jane Street Group faces a lawsuit alleging it used insider info to profit during Terraform Labs‘ $40 billion collapse.
- The suit claims an employee relayed private details from a “secret” chat, enabling the firm to front-run major transactions.
- A wallet linked to Jane Street is accused of pulling $85M from a liquidity pool minutes after Terraform Labs did the same.
- The trading firm calls the claims “baseless” and blames the collapse on fraud by Terraform’s management.
A federal lawsuit was filed in Manhattan on Monday, accusing the quantitative trading giant Jane Street of using insider information to profit from the catastrophic 2022 crash of Terraform Labs. The suit, brought by the bankrupt company’s administrator, alleges that former intern Bryce Pratt obtained material non-public details from Terraform employees through a group chat dubbed “Bryce’s secret.” This information was then allegedly used by Jane Street to execute profitable, front-running trades.
Specifically, the heavily redacted filing claims Jane Street learned about a planned private withdrawal of 150 million TerraUSD. Consequently, a wallet linked to the firm withdrew 85 million TerraUSD from the same Curve liquidity pool just ten minutes later, according to reports. Administrator Todd Snyder stated that Jane Street “abused market relationships to rig the market in its favor” during the collapse.
However, Jane Street has vehemently denied the allegations, calling the suit a “transparent attempt to extract money.” The firm argues Terraform’s failure was “the result of a multibillion-dollar fraud perpetrated by the management.” This legal action follows a similar December 2025 lawsuit against Jump Trading, another firm scrutinized for its role in the Terra ecosystem’s implosion.
The collapse, which wiped $40 billion from the market, was a pivotal moment in crypto history. Meanwhile, federal prosecutors had already been probing messages from Jane Street and Jump employees for potential market manipulation. Independent analysis also suggests the $85 million withdrawal was a major catalyst for the stablecoin’s depegging.
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