Liquidators allege the trading firm used non-public information to front-run Terraform Labs’ 2022 bankruptcy, generating illicit gains.
Quantitative trading firm Jane Street is being sued for allegedly profiting $134 million from insider trading during Terraform Labs’ 2022 collapse. The lawsuit claims the firm used non-public information to front-run market-moving events as Terra’s algorithmic stablecoin lost its peg to the U.S. dollar.
The legal complaint, filed by Terraform Labs’ bankruptcy administrator, estimates the collapse wiped out $40 billion in investor funds. Jane Street has denied the allegations, calling the lawsuit a “desperate effort” and seeking dismissal with prejudice in a New York court.
The case centers on accusations that Jane Street obtained material, non-public information from Terraform insiders to execute trades ahead of the stablecoin’s implosion. Retail investors globally suffered significant losses during the event.