Feb 24, 2026
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BEARISH 📉 : Terraform Labs sues Jane Street for market manipulation in 2022 collapse
Four years after the Luna collapse, Terraform Labs is suing Jane Street for alleged insider trading and market manipulation during the TerraUSD (UST) collapse in 2022. The lawsuit claims:
- Jane Street shorted UST knowing about liquidity shifts, allegedly hastening a $40 billion market value loss.
- Terraform seeks to recover damages, accusing Jane Street of exploiting confidential data for profits while retail investors suffered losses.
- The lawsuit focuses on transactions on Curve Finance, where Jane Street withdrew $85 million in UST shortly after Terraform Labs’ unannounced $150 million withdrawal.
- The allegations are based on the "misappropriation theory" of insider trading, suggesting non-public data was misused.
Jane Street denies these accusations, claiming the suit aims to shift blame from Terraform's flawed protocol. The legal action also highlights challenges in defining "privileged access" in DeFi, with potential implications for compliance standards in high-frequency trading within the sector.
This case follows a similar lawsuit against Jump Trading, seeking over $4 billion in damages, expanding the scope of liability in DeFi. It underscores the complex dynamics between crypto projects and market makers amid the 2022 crisis fallout.