The court-appointed administrator overseeing Terraform Labs’ bankruptcy, Todd Snyder, has launched a lawsuit against global trading firm Jane Street and two of its executives. Filed in a Manhattan federal court, the suit names founders Robert Granieri, as well as employees Bryce Pratt and Michael Huang, as defendants. Snyder accuses Jane Street of using insider information to deepen the collapse of the Terra blockchain ecosystem.
Allegations and Legal Proceedings
According to the suit, Jane Street allegedly obtained key intelligence from individuals linked to Terraform Labs, executing major token sales just hours before the Terra ecosystem began to unravel. The lawsuit outlines Jane Street’s prominent role in crypto trading since 2018 and notes a significant uptick in its dealings involving Terraform in 2022.
Snyder claims that Jane Street’s involvement with Terraform intensified when Bryce Pratt, a former intern at Terraform, reconnected with old colleagues. This renewed contact, he asserts, facilitated the clandestine transfer of business secrets through unofficial channels, allowing Jane Street to gain a critical edge.
Alleged Role in Terra Meltdown
The unraveling of Terra began in May 2022, when its algorithmic stablecoin, TerraUSD, lost its peg. This triggered a chain reaction that wiped out around $40 billion in market value, eventually leading to Terraform Labs’ bankruptcy filing in 2024. Meanwhile, Do Kwon, one of Terraform’s founders, pleaded guilty to two counts of fraud in the United States and was sentenced to 15 years in prison.
Court documents allege that Jane Street unloaded a substantial quantity of tokens moments before the full-scale chaos engulfed Terra. Snyder contends that Jane Street, armed with privileged data, was able to exit multi-million dollar positions at a highly opportune moment, mitigating potential losses while the system teetered on the brink.
Market Manipulation and Insider Trading Claims
Another key claim focuses on transactions from May 7, 2022. Without public notice, Terraform Labs removed $150 million in TerraUSD from a liquidity pool. Within minutes, Jane Street executed an unprecedentedly large transaction, disposing of $85 million in TerraUSD from the same pool. Snyder argues that this maneuver triggered a sell-off that quickly escalated into a systemic crisis.
The lawsuit further asserts that Jane Street continued to leverage confidential information as the crisis unfolded. Snyder claims that a private chat group, involving Bryce Pratt and Do Kwon, influenced critical trading decisions that directly impacted market dynamics.
The Office of the Terraform Labs Plan Administrator announced it filed suit against Jane Street for “insider trading, market manipulation, and deceptive trading practices,” maintaining that these activities contributed to the unrest in May 2022.
The outcome of this lawsuit is being closely watched across the industry, as it could set important precedents regarding transparency and regulatory compliance for major crypto trading firms.
