Terraform Labs’ bankruptcy estate has accused Wall Street trading giant Jane Street of using a secret insider Telegram group to dump huge holdings of the TerraUSD (UST) stablecoin just hours before UST’s catastrophic depeg in May 2022.
In an amended complaint filed this week in Manhattan federal court, Terraform administrator Todd Snyder says Jane Street, co-founder Robert Granieri and traders Bryce Pratt and Michael Huang relied on a private chat and other backchannel tips to obtain non-public information and “front-run trading that hastened the collapse” of the Terra ecosystem.
Key allegations from the filing
- A private Telegram group called “Bryce’s Secret” was created on February 22, 2022. It allegedly included Jane Street trader Bryce Pratt (a former Terraform intern) and two former Terraform colleagues, including Terraform’s head of business development.
- Over the months before the depeg, Pratt is accused of soliciting “defi info” from Terraform contacts — including asset positions, liquidity needs and strategy — giving Jane Street an unfair market advantage.
- Using that information, the complaint alleges Jane Street sold roughly $193 million of UST “near par” on May 7, 2022. Within hours UST lost its $1 peg and the broader Terra ecosystem entered a death spiral.
- The estate says Jane Street then placed short positions in UST and LUNA, netting an additional alleged profit of about $134 million. Terraform claims Jane Street profited and avoided losses by exploiting confidential information and by accelerating the market move.
- The complaint seeks to hold the defendants to account under the Commodities Exchange Act and asks the court to award disgorgement of the profits Jane Street earned and the losses it avoided.
Jane Street response
Jane Street moved to dismiss the original lawsuit in April, arguing Terraform’s own management was responsible for the collapse and that Jane Street’s trades came after damaging information about UST and LUNA was already public. The firm characterized the suit as an attempt by the estate to extract cash to cover Terraform’s alleged fraud.
What’s next
The amended complaint has sharpened the estate’s accusations and frames the case as both a market-manipulation and insider-information claim. The court will now consider Jane Street’s motion and the amended allegations as the litigation proceeds in Manhattan federal court.
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