Jane Street has returned to the spotlight after Terraform Labs’ bankruptcy estate accused the trading firm of insider trading tied to the May 2022 collapse of TerraUSD (UST) and LUNA.
The lawsuit alleges Jane Street used non-public information about Terraform’s liquidity withdrawals to exit positions and profit before the stablecoin lost its dollar peg.
According to the complaint, Terraform quietly removed about $150 million of liquidity from Curve pools that supported UST. Shortly afterward, wallets linked to Jane Street allegedly withdrew or sold tens of millions of dollars worth of UST.
Terraform claims these actions accelerated the loss of confidence that triggered a broader collapse, wiping out about $40 billion in value.
However, these remain allegations. Jane Street has denied wrongdoing and said it will defend itself in court. No court has yet ruled on the claims.
Jane Street’s name has also surfaced repeatedly in connection with other major crypto collapses, including FTX. However, the firm has not been accused of wrongdoing in the FTX case.
Instead, the connection comes through people. Sam Bankman-Fried, founder of FTX and Alameda Research, previously worked as a trader at Jane Street. Alameda CEO Caroline Ellison also began her career at the firm.
These links reflect Jane Street’s role as a major training ground for quantitative traders. However, there is no verified evidence that Jane Street, as a company, played any role in FTX’s fraud or collapse.