Key Takeaway:
- Terraform’s administrator sued Jane Street over alleged insider trading during Terra’s collapse.
- Jane Street denies wrongdoing; outcome hinges on court-tested evidence and disclosures.
- Case could test DeFi misappropriation theory, shaping treatment of privileged protocol information.
Terraform Labs’ court-appointed administrator has sued Jane Street Group LLC for alleged insider trading tied to Terra’s 2022 collapse, according to Bloomberg. The case places a major trading firm’s crypto activity under legal scrutiny.
As reported by the Wall Street Journal, the administrator alleges Jane Street traded on non-public information from Terraform insiders; the firm disputes this and has described the suit as baseless. Any liability will turn on evidence tested in court.
Expert legal commentary cited by Decrypt suggests the case could test misappropriation theory in a DeFi setting, where privileged, protocol-specific information may face stricter treatment. That framing underscores possible precedent beyond this dispute.
Per the complaint timeline described by The Block, Terraform withdrew 150 million UST from Curve3pool on May 7, 2022 in a non-public move. Less than ten minutes later, Jane Street allegedly withdrew about 85 million UST from the same pool, before the public knew of the first action.
The liquidator argues these rapid, sequential withdrawals indicate that non-public information informed trading decisions. “Jane Street abused market relationships to rig the market in its favor during one of the most consequential events in crypto history,” said Todd Snyder, the court-appointed liquidation administrator of Terraform Labs. “On behalf of injured parties, we will pursue all avenues supported by the facts and the law against those who exploited their position and reaped substantial profits at the expense of Terraform Labs’ creditors.”
These assertions are allegations, not findings, and no court has ruled on their merits. The complaint’s chronology is central to assessing causality in the UST depeg and how information asymmetries may have affected liquidity.
At the time of this writing, Terra (LUNA) traded near $0.05984 with short‑term volatility around 8.72% and an RSI reading near 40.97. Sentiment indicators were described as bearish; these figures provide market context and do not bear on the legal issues.
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