Terraform Labs Sues Jane Street Over Alleged Insider Trading in 2022 UST and LUNA Collapse
The Office of the Plan Administrator for Terraform Labs has filed a lawsuit against Jane Street Group, alleging insider trading, market manipulation, and deceptive trading practices linked to the May 2022 collapse of UST and LUNA.
Terraform Labs Files Lawsuit in Manhattan Federal Court
The lawsuit was filed on February 23, 2026, in Manhattan federal court by bankruptcy administrator Todd Snyder. The complaint claims that Jane Street and certain employees used material non public information to trade ahead of major market events, worsening the collapse of the Terraform ecosystem.
Allegations of Insider Trading and Market Manipulation
According to the complaint, Terraform Labs withdrew 150 million UST from a key liquidity pool on May 7, 2022. Minutes later, a wallet allegedly linked to Jane Street sold 85 million UST in a concentrated transaction valued at approximately 85 million dollars.
The lawsuit argues that this large sale intensified market panic during an already fragile moment. The rapid sell off is said to have accelerated the depeg of UST and contributed to the sharp decline of LUNA.
The broader collapse erased an estimated 40 billion dollars in market value, causing significant losses for retail and institutional investors worldwide.
Claims of Deceptive Trading Practices
The complaint further alleges that Jane Street traded on confidential information regarding liquidity movements within the Terraform ecosystem. By acting on this information before it became public, the firm allegedly avoided major losses while other market participants suffered severe damage.
Terraform Labs seeks to recover value for creditors and hold Jane Street accountable for what it describes as exploitation of the ecosystem during one of the most consequential events in crypto market history.
Jane Street Responds
Jane Street has denied the allegations, calling the claims baseless. The firm argues that the collapse resulted from fundamental weaknesses and alleged misconduct within Terraform Labs itself, not from any improper trading activity on its part.
Potential Impact on Crypto Regulation
This case could have significant implications for how insider trading laws apply to digital asset markets. A ruling in this lawsuit may help define legal standards around the use of non public information in crypto trading and shape future regulatory enforcement.
As the legal battle unfolds, the outcome may influence how courts and regulators address market conduct in decentralized finance and broader cryptocurrency markets.
