Jane Street asks U.S. court to toss Terraform insider-trading suit

Jane Street Group LLC has filed a motion in the U.S. District Court for the Southern District of New York seeking dismissal of a lawsuit brought by the bankruptcy administrator of Terraform Labs, which accuses the trading firm of insider trading and market manipulation tied to the 2022 Terra collapse. Jane Street calls the complaint unfounded and argues Terraform’s own misconduct is the true cause of losses.

The complaint, lodged on February 23, 2026, alleges that Jane Street used material non-public information obtained via contacts with former Terraform insiders to adjust positions and exit exposures ahead of the UST depeg and LUNA meltdown. The filing cites specific wallet movements and claims roughly $85 million was withdrawn from liquidity pools minutes before larger withdrawals that signaled trouble. The suit names several Jane Street personnel and seeks damages and disgorgement.

Market participants say the case raises reputational and regulatory questions for high-frequency and proprietary trading firms that operate in crypto markets. While the immediate reaction in spot and derivatives markets has been muted, the litigation adds uncertainty and could influence counterparty behavior and liquidity provision, especially around stressed events.

The dispute is set against the broader backdrop of the Terra saga: Terraform’s collapse in May 2022 wiped out tens of billions in market value, and founder Do Kwon later pleaded guilty to fraud-related charges and was sentenced to 15 years in U.S. custody in December 2025. The bankruptcy administrator is pursuing multiple legal avenues to recover assets for creditors and harmed investors.

Legal analysts expect Jane Street’s motion to dismiss to be the opening salvo in protracted litigation; if the court allows the case to proceed, discovery could compel production of internal communications, trading records and wallet histories. A full trial or settlement could carry implications for regulatory scrutiny and market-making practices in decentralized finance.