Terraform Labs Bankruptcy Sues Jane Street Over Alleged Insider Trades

The bankruptcy administrator for Terraform Labs has filed a federal lawsuit alleging that quantitative trading firm Jane Street used insider information obtained through a private Telegram channel to profit from the collapse of the Terra ecosystem in May 2022. The complaint, filed in Manhattan, accuses Jane Street of selling its entire $192 million position in the TerraUSD (UST) stablecoin just hours before it lost its dollar peg, and then making approximately $134 million by shorting related tokens.

The lawsuit centers on a Telegram group called "Bryce's Secret," named for Bryce Pratt, a former Terraform intern who later joined Jane Street as a systems developer. The complaint alleges the channel, created in February 2022, was used to share material nonpublic information between Pratt and former colleagues still at Terraform Labs. In one cited message, a participant reportedly stated they knew the buyer was "Jane Streeeeeeeet."

According to the filing, on May 7, 2022, Terraform Labs withdrew about $150 million in UST from a key liquidity pool on the decentralized exchange Curve Finance. Minutes later, a wallet allegedly linked to Jane Street executed an $85 million UST swap on...