Terraform Labs' bankruptcy administrator has taken Jane Street to court, accusing the trading firm of using a private Telegram group and confidential information to dump its TerraUSD (UST) stablecoin holdings just hours before the ecosystem imploded. The lawsuit, filed by administrator Todd Snyder in Manhattan federal court in February, alleges that Jane Street, co-founder Robert Granieri, and traders Bryce Pratt and Michael Huang misappropriated inside information and manipulated market prices — actions the complaint says triggered the UST depeg and the subsequent death spiral of the Terra ecosystem.
The Secret Telegram Group
At the center of the allegations is a private Telegram chat called 'Bryce's Secret,' created on February 22, 2022. According to the filing, the group included Bryce Pratt — a former Terraform intern who later worked at Jane Street — and two former colleagues, among them Terraform's Head of Business Development. Pratt allegedly reached out to his Terraform contacts for 'defi info,' assets, strategies, and liquidity needs. The lawsuit claims this gave Jane Street a market advantage over other traders who lacked access to such inside knowledge.
The Alleged Trading Strategy
On May 7, 2022, Jane Street sold off its roughly $193 million UST position near par, the lawsuit states. The firm then allegedly took short positions in both UST and LUNA, betting that the prices would fall. The complaint says these moves were based on insider information and allowed Jane Street to maximize profits and avoid losses while others were caught off guard. According to the filing, Jane Street made an additional $134 million from its UST and LUNA shorts — a profit that came as the Terra ecosystem was collapsing and retail investors were losing their savings.
Jane Street's Defense
Jane Street filed a motion to dismiss the lawsuit in April. The trading firm argues that Terraform's own management was responsible for the collapse, not Jane Street. It contends that its transactions occurred after damaging information was already public. The motion seeks to have the case thrown out before it goes to trial, putting the burden on Snyder to prove that the alleged insider trading — and not Terraform's own decisions — caused the meltdown.
The case now awaits a decision from the court on Jane Street's motion to dismiss. If the lawsuit proceeds, it could force the firm to disclose internal communications and shed light on how institutional traders positioned themselves ahead of one of crypto's most spectacular failures.
