Todd Snyder, Terraform Labs’ bankruptcy planning administrator, has filed a lawsuit against Jane Street Group for alleged front-running transactions that allowed the trading giant to profit from non-public information obtained from Terraform insiders, The Wall Street Journal reported on Monday.
The complaint filed in Manhattan federal court alleges that these trades not only enriched Jane Street, but also contributed to the rapid collapse of the TerraUSD (UST) stablecoin and LUNA in May 2022.
The lawsuit also names Jane Street co-founder Robert Granieri and employees Bryce Pratt and Michael Huang as defendants.
The May 2022 Terraform implosion caused the dollar-pegged stablecoin TerraUSD to lose its anchor and its sister token, Luna, to plummet to near zero within days, wiping out around $40 billion in value.
Separately, Snyder is suing Jump Trading for $4 billion, alleging that Jump Trading initially supported TerraUSD and orchestrated the market manipulation, generating about $1 billion in profits before it withdrew its support.
Manhattan federal prosecutors previously investigated Telegram chats between staff at Jump Trading, Jane Street and Alameda Research related to the proposed TerraUSD bailout.
The investigation focuses on whether these communications may have amounted to market manipulation leading up to the collapse of the stablecoin, rendering UST and Luna virtually worthless and sparking a wave of bankruptcies including Three Arrows Capital, Voyager Digital, and FTX.
Terraform founder Do Kwon was sentenced to 15 years in prison after pleading guilty to fraud charges related to misleading statements about stablecoin stability mechanisms.
