The Terraform Labs bankruptcy administrator has sued Jane Street, alleging the quantitative trading firm used non-public information to profit at the height of the crypto market’s collapse in 2022.
“Jane Street abused market relationships to rig the market in its favor during one of the most consequential events in crypto history,” Terraform Labs court-appointed plan administrator Todd Snyder alleged in a statement to WSJ.
The accused firm responded by characterizing the suit as a “desperate” attempt to “extract money” despite how “it is well-established that the losses suffered by Terra and Luna holders were the result of a multibillion-dollar fraud perpetrated by the management of Terraform Labs,” per the report.
Decrypt has reached out to Jane Street and the Terraform Labs wind-down trust for comment, but has not yet received a response.
“This lawsuit seems to argue that the most important moves do happen in private chats before hitting the blockchain,” Andrew Rossow, public affairs attorney and CEO of AR Media Consulting, told Decrypt.
If the allegations are proven, the case could signal a shift toward applying a stricter misappropriation theory in crypto markets.
Under that approach, liability would not depend on a traditional corporate insider relationship. Instead, a market maker could face exposure if it obtained confidential information from a protocol team and used it to trade against the broader market, Rossow explained.
The theory would also broaden the definition of an “insider” in such cases. Private chat groups or informal back channels could be treated as the functional equivalent of a corporate boardroom, meaning insider status could extend to anyone with direct access to a protocol’s crisis communications.
“It suggests that in crypto, an ‘insider’ isn't just an executive; it's anyone with a private line to the ‘war room’ of a protocol during a crisis,” Rossow said.
The legal observer said the case will likely hinge on materiality and source.
