Jane Street Moves to Dismiss Terraform Insider Trading Lawsuit

• Jane Street asked a US judge to dismiss Terraform’s lawsuit over alleged insider trading.
• The firm said Terraform is trying to shift blame for fraud tied to founder Do Kwon.
• The case is now before Judge Dale E. Ho in the Southern District of New York.

Jane Street Group has asked a US judge to dismiss a lawsuit that accuses the trading firm of using inside information before the 2022 collapse of Terraform Labs’ crypto ecosystem.

The case was filed by the bankruptcy administrator handling Terraform’s wind-down. The suit claims that Jane Street used non-public information and engaged in trading activity to profit ahead of the $40 billion crash tied to TerraUSD and LUNA.

Jane Street denied all claims in a court filing on Thursday and asked the court to throw out the case with prejudice, which would prevent the same claims from being filed again.

Jane Street Says Terraform Is Shifting Blame

In its filing, Jane Street said the lawsuit is an attempt to make the firm pay for fraud committed by Terraform itself.

The company wrote that Terraform’s estate is trying to “extract cash from Jane Street to foot the bill for a fraud” carried out by Terraform management.

Jane Street argued that the collapse was caused by Terraform’s own actions, not by outside trading firms. It also said much of the Terraform misconduct has already been prosecuted in court.

On the other hand, Terraform founder Do Kwon pleaded guilty to fraud-related charges in December and was sentenced to 15 years in prison. A federal judge called the scheme an “epic fraud” and said the damage ranked among the worst fraud cases seen in federal prosecutions.

Kwon admitted to misleading investors and apologized in court to victims who lost savings during the TerraUSD and LUNA collapse. Jane Street cited those outcomes to argue that the real cause of investor losses has already been identified.

Firm Rejects Insider Trading Claims

Terraform’s estate sued Jane Street in February 2026. The complaint said the firm exited hundreds of millions of dollars in crypto exposure just hours before the ecosystem failed.

Jane Street responded that its largest trades happened after key information about UST and LUNA was already public.

It said Terraform’s own complaint admits that a transition to a new liquidity pool had been publicly announced weeks earlier and caused no market reaction at the time.

Jane Street acknowledged building a short position on May 8 and selling assets on May 7, but said the lawsuit fails to identify any material non-public information or secret communications that gave it an advantage.

Jane Street also invoked the Wagoner rule, which can block bankruptcy estates from suing third parties for losses caused by the debtor’s own fraud.

The firm further argued the claims are extraterritorial, saying Terraform failed to show the disputed trades actually took place in the United States. The case, numbered 1:26-cv-01536-DEH, is before Judge Dale E. Ho in the Southern District of New York.

Related: India Moved on Jane Street Before Terraform’s Crypto Lawsuit