The court-appointed administrator overseeing Terraform Labs’ bankruptcy has filed a lawsuit against the trading firm Jane Street. The lawsuit accuses the company and several of its executives of insider trading that allegedly worsened the $40 billion collapse of the Terra ecosystem.
Todd Snyder, overseeing Terraform’s bankruptcy proceedings, filed the complaint in a Manhattan federal court on Monday. The suit names Jane Street co-founder Robert Granieri, along with employees Bryce Pratt and Michael Huang.
The Office of the Terraform Labs Plan Administrator has filed a lawsuit against Jane Street, alleging insider trading, market manipulation, and deceptive trading practices that contributed to the May 2022 collapse of Terraform Labs.
The complaint details how Jane Street…
— Terra 🌍 Powered by LUNA 🌕 (@terra_money) February 24, 2026
The heavily redacted filing claims the defendants misused confidential information gained from connections with Terraform insiders to trade ahead of the Terra ecosystem’s sudden collapse.
Alleged pre-collapse token sales
Terraform’s decline began in May 2022 when its algorithmic stablecoin TerraUSD lost its dollar peg. This triggered a chain reaction that wiped out about $40 billion in market value. The company later filed for bankruptcy in 2024. Its co-founder, Do Kwon, was arrested and pleaded guilty in the United States to two fraud charges before receiving a 15-year prison sentence in December.
At the centre of the lawsuit is a claim that Jane Street executed large token sales just hours before the Terra ecosystem fell apart.
Also Read: Taiko Halts Bridge Operations After $1.7 Million Exploit
Snyder claims that Jane Street received important non-public information that enabled it to unload “hundreds of millions of dollars” in exposure at a crucial moment. Although the trading firm began working with Terraform in 2018, its activity with Terra-linked tokens reportedly increased in 2022 after Pratt, a former Terraform intern, reconnected with previous colleagues.
The complaint alleges that these renewed connections created what Snyder calls a “back-channel” source of sensitive business information.
Claims of ongoing coordination
One main allegation involves May 7, 2022. According to the filing, Terraform withdrew 150 million TerraUSD tokens from a liquidity pool without a public announcement. Minutes later, Jane Street allegedly made its largest-ever swap of the token, selling 85 million TerraUSD into the same pool. The administrator argues this action accelerated a broader sell-off that ultimately pushed the system into a death spiral.
The lawsuit also claims that Jane Street continued to use privileged insights as the crisis worsened. Snyder asserts that internal communications, including a group chat allegedly set up between Pratt and Kwon, influenced trading decisions as TerraUSD’s peg weakened.
Jane Street has rejected the allegations
Jane Street has pushed back against the claims and has reportedly characterized the lawsuit’s allegations as inaccurate. The firm’s position is important because the lawsuit’s allegations have not been established as facts by a court.
At this stage, the dispute is therefore a legal battle over what information Jane Street received, when it received it, whether that information was confidential and whether the firm’s trading activity was based on that information.
Those questions will likely determine whether the administrator can prove an insider-trading or related claim.
Enjoyed this? Bookmark DeFi Planet, explore related topics, and follow us on Twitter, LinkedIn, Facebook, Instagram, Threads, and CoinMarketCap Community for seamless access to high-quality industry insights
Take control of your crypto portfolio with DEFI PLANET PRO, DeFi Planet’s suite of analytics tools.
