LUNA Crash Initiator? Terraform Labs Sues Wall Street's Jane Street: Illegally Dumped $85 Million UST

The Terra/LUNA collapse sparks a new wave of legal battles. Terraform Labs’ bankruptcy trustee Todd Snyder has filed a lawsuit in the U.S. Federal Court in New York against Wall Street quant trading giant Jane Street, accusing the firm of obtaining non-public information through connections with Terraform insiders and dumping 85 million UST tokens just 10 minutes before the UST depeg, becoming a key factor in the collapse of the Terra ecosystem.
(Background: Wintermute leaked that the mysterious wallet causing the UST depeg is linked to former SBF employer, Jane Street)
(Additional context: Do Kwon admits to fraud: “I deceived investors who bought UST/LUNA, I am very sorry… hope for a significant reduction in sentence”)

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• Selling 85 million UST in 10 minutes — “Largest single trade in history”
• Jane Street’s strong response: “Baseless, opportunistic”
• Aftermath of Terra collapse, Do Kwon in custody

The court-appointed bankruptcy trustee of Terraform Labs, Todd Snyder, recently filed a lawsuit in Manhattan Federal Court targeting the well-known Wall Street quant trading firm Jane Street, along with co-founder Robert Granieri and employees Bryce Pratt and Michael Huang. The complaint alleges they “misappropriated confidential information and manipulated market prices,” leading to a catastrophic collapse in May 2022 that wiped out over $40 billion in the Terra ecosystem.

Selling 85 million UST in 10 minutes — “Largest single trade in history”

According to the complaint, Jane Street allegedly obtained material non-public information through relationships with Terraform Labs insiders and used this intelligence to trade Terra blockchain tokens.

The most explosive allegation is that on May 7, 2022, just 10 minutes after Terraform withdrew 150 million UST from the liquidity pool, Jane Street sold 85 million UST — described as the company’s “largest-ever single swap.”

The complaint claims this massive sell-off acted as a trigger, sparking panic selling and accelerating the UST depeg and the collapse of the entire Terra ecosystem.

Jane Street’s strong response: “Baseless, opportunistic”

In response to the allegations, Jane Street strongly denies them, calling the claims “baseless and opportunistic,” and further states:

“The losses suffered by Terra and Luna holders are the result of a multi-billion dollar fraud orchestrated by Terraform Labs’ management.”

Jane Street’s stance clearly shifts blame onto Terraform’s operational failures and management fraud, rather than external market manipulation by traders.

Aftermath of Terra collapse, Do Kwon in custody

In May 2022, the algorithmic stablecoin UST lost its peg to the dollar, triggering a chain reaction that caused LUNA tokens to plummet to zero, wiping out over $40 billion in market value and becoming one of the most severe crashes in crypto history.

Terraform Labs filed for bankruptcy protection in 2024. Its co-founder Do Kwon pleaded guilty to fraud last December and was sentenced to 15 years in prison.

Notably, early in the incident, Wintermute researchers publicly pointed out that the mysterious large transaction causing the initial UST depeg was likely linked to a wallet associated with Jane Street. Now, with Terraform officially suing, this long-standing market speculation has been formally brought to court.

The plaintiff requests a jury trial and seeks damages, restitution of unjust enrichment, and interest.