Summary
- Jane Street said Terraform Labs’ lawsuit alleging insider trading and market manipulation should be dismissed in full because it is an attempt to shift responsibility for fraud that has already been punished onto an outside party.
- Jane Street said its trades were made after key information related to UST and Luna had been disclosed and were tied to a previously announced liquidity pool switch, adding that no nonpublic information or unofficial communication channels were presented to support the insider-trading claims.
- Jane Street said the lawsuit lacks a valid basis for claims over losses tied to the collapse of the Terra ecosystem, citing the Wagoner rule and the failure to prove that the disputed trades took place in the US.
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Jane Street has asked a court to dismiss Terraform Labs’ lawsuit accusing the trading firm of insider trading and market manipulation, rejecting the claims head-on.
The Block reported on April 23 that Jane Street, in a filing in the US District Court for the Southern District of New York, called Terraform’s case “an attempt to shift responsibility for fraud that has already been punished onto an outside party” and urged the court to throw it out in its entirety. The firm denied it was responsible for the collapse of the Terra ecosystem and argued the matter had already been resolved through the courts.
“This lawsuit is an attempt by Terraform Labs to extract money by shifting the costs of its own fraud,” Jane Street wrote. “The fraud tied to Terra has already been charged, adjudicated and punished, and we were not involved.”
Terraform previously sued Jane Street, alleging the firm used insider information and manipulated the market in a way that helped trigger the collapse of the UST and Luna ecosystem. Jane Street responded that its key trades took place only after core information about the condition of UST and Luna had already been made public.
The firm also said the liquidity pool switch cited by Terraform had been disclosed in advance and drew no market reaction at the time. It added that Terraform failed to present any nonpublic information or unofficial communication channels that could support an insider-trading claim.
Jane Street also invoked the Wagoner rule, which bars a bankrupt estate from seeking damages from third parties for losses caused by the debtor’s own fraud rather than the third party’s conduct. It further argued that Terraform had not shown the disputed trades took place in the US, meaning the case fails to meet jurisdictional requirements.
Terraform founder Do Kwon pleaded guilty in December 2025 to fraud and conspiracy charges and is now serving a 15-year prison sentence. A US jury has also found Terraform Labs and Kwon liable for securities fraud.
YM Lee
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