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Jane Street Accused Of Insider Trading In Terraform Collapse Lawsuit

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Jane Street Accused Of Insider Trading In Terraform Collapse Lawsuit
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High-frequency trading powerhouse Jane Street is accused of insider trading that accelerated the downfall of crypto project Terraform Labs in 2022, which destroyed billions of investors’ wealth.

Todd Snyder, the administrator winding down Do Kwon’s Terraform Labs, has sued Jane Street, seeking damages from its co-founder Robert Granieri besides employees Bryce Pratt and Michael Huang, according to a report by Wall Street Journal.

Snyder has accused the trading firm of using privileged information from Terraform insiders to front-run trading that sped up Terraform’s breakdown.

That means trading on private facts affecting price movements before they are public and then jumping ahead of big orders to pocket profits ahead of others.

“Jane Street abused market relationships to rig the market in its favour during one of the most consequential events in crypto history,” Snyder said in a statement.

Do Kwon and Daniel Shin established the blockchain startup Terraform Labs in Singapore in 2018. It gained fame mostly for developing the algorithmic stablecoin TerraUSD, its native token Luna and the Terra blockchain.

A wind-down trust assumed management of the business after it filed for bankruptcy in January 2024. In August, Do Kwon pleaded guilty to two criminal charges and was given a 15-year prison sentence.

In May 2022, the stablecoin lost its 1:1 USD peg, and the Luna token fell to zero in a matter of days. As a result, a staggering $40 billion in market capitalization vanished in a single week, causing a catastrophic devastation of wealth around the globe. It also led to collapse of other crypto companies who had exposure in the project.

It all started on May 7, when Terraform quietly withdrew 150 million TerraUSD from the decentralized stablecoin-focused trading platform Curve3pool.

The lawsuit alleges that within 10 minutes, before Terraform informed the public of anything, a wallet linked to Jane Street also withdrew 85 million TerraUSD from the same pool. This apparently triggered the market panic.

Kwon clarified on the following day that the 150 million withdrawal was meant to move coins to a new liquidity pool for stablecoins, but it was too late.

Then, On May 9, with TerraUSD starting to slip, Jane Street’s Pratt fired off a group chat to Kwon and team, floating offers to buy bitcoin or Luna. Kwon commented that Jump’s co-founder Bill DiSomma should have clued them earlier about Terraform’s fundraising push.

Jane Street has called the lawsuit an attempt to extract money from the trading firm while vowing to defend vigorously against “baseless, opportunistic claims.”

“This desperate suit is a transparent attempt to extract money when it is well-established that the losses suffered by Terra and Luna holders were the result of a multibillion-dollar fraud perpetrated by the management of Terraform Labs,” said a spokesman for Jane Street.”

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Written by
Kapil Rajyaguru -

Kapil Rajyaguru is a news editor at 3.0 TV with over 15 years of professional writing experience and more than four years dedicated to the cryptoverse.

An engineer by education and a writer by passion, Kapil brings a rare mix of technical insight and storytelling finesse. A firm believer that cryptocurrencies, blockchain and AI are the building blocks of the future, he crafts in-depth news and analysis to educate, empower and prepare the masses for the next frontier of Web3.

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