Jane Street Accused of Dumping $192 Million of UST Before Terra Collapse

Jane Street is facing a new allegation that it used nonpublic information to unload about $190 million of holdings shortly before the 2022 Terra collapse.

CoinDesk reported on May 20 that the administrator of the Terraform Labs bankruptcy estate recently alleged in a complaint filed in federal court in Manhattan that Jane Street sold $192 million of TerraUSD, or UST, in May 2022 using confidential information obtained from a Terraform Labs insider.

More detailed allegations emerged after parts of the complaint were unsealed. Jane Street had already asked the court in February to dismiss the claims, calling them "desperate and baseless."

The complaint alleges that Jane Street obtained nonpublic information on Terra through Bryce Pratt, a former Terraform Labs intern. Pratt, who was working at Jane Street at the time, allegedly communicated with Terraform Labs insiders through a private Telegram channel and shared confidential information.

The bankruptcy estate argues that this access helped Jane Street avoid major losses and generate additional profit. It claims the firm dumped its UST holdings while the token was still trading near its $1 peg, then made $134 million from short positions as the Terra ecosystem unraveled.

At the center of the new allegations are trades executed on May 7, 2022. The estate says Jane Street sold all of its roughly 193 million UST that day. The largest transaction was an $85 million UST sale on decentralized exchange Curve Finance.

Jane Street denied the allegations in full. The firm said the lawsuit was an attempt to extract money despite what it described as the already established fact that Terra-Luna investor losses stemmed from a multibillion-dollar fraud by Terraform Labs executives. It said it would fight what it called baseless and opportunistic claims.