Jane Street Group, one of Wall Street’s leading trading companies, is on the agenda again with the claim that it sold approximately $192 million worth of TerraUSD (UST) just before the collapse of the Terra ecosystem. New lawsuit documents filed in the US Manhattan federal court contain striking details about the company receiving insider information.
There is a private communication line at the center of the allegations
According to the case file prepared by the court-appointed liquidation administrator of the company Terraform Labs, parts of which were disclosed last week, Jane Street took advantage of a private Telegram chat channel to gain high-level advantage. It is stated that through this channel, Bryce Pratt, who had previously interned at Terraform and was on the Jane Street staff at that time, contacted his former colleagues.
In the case file, it is claimed that, thanks to this communication network, Jane Street disposed of the TerraUSD asset at a level very close to the fixed value and then entered into short positions and gained approximately 134 million dollars from the collapse of Terra’s 40 billion dollar ecosystem. It is emphasized that one of the company’s largest transactions was the sale of 85 million UST via the decentralized finance protocol Curve Finance on May 7, 2022. This sale took place just nine minutes after Terraform withdrew 150 million UST from the same pool.
While experts have long debated this large Curve exchange linked to the collapse of Terra, the lawsuit claims with new documents that this transaction was made from the wallet belonging to Jane Street.
Remarkable statements in internal company correspondence
In an internal communication included in the documents, Pratt is reported to have joked to his teammates that “having a knowledge advantage is mildly gratifying.” It is also stated that when information came that blockchain analytics companies had detected Jane Street’s wallets, employees within the company expressed concerns about “deactivating” the wallets.
Regarding the issue, the following statements came to the fore in the statement made on behalf of Jane Street and reflected in the court records:
“This lawsuit is a transparent attempt to extract money from Jane Street, despite the fact that it is publicly known that losses to Terra and Luna investors resulted primarily from multibillion-dollar fraud committed by Terraform Labs management. We will vigorously defend ourselves against these opportunistic and unfounded allegations, as evidenced by the motion to dismiss we filed with the court last month.”
Among the defendants in the case are Robert Granieri, one of the founders of the company, and trader Michael Huang. The charges include alleged violations of federal securities laws and the Commodity Exchange Act. The plaintiff demands that the profits earned be returned and that the creditors be compensated for their losses.
Mini dictionary: Jane Street is a large trading company that carries out high-frequency buying and selling transactions in a wide variety of financial products, especially Treasury bonds, stocks and cryptocurrencies around the world, and plays an important role in ensuring market liquidity.
Impact of court decisions
In 2023, in a separate case heard in the US federal court and in which the Securities and Exchange Commission was a party, it was decided that UST and Luna assets should be considered securities. This decision strengthens the legal basis of the current case.
New claims and links
According to another striking information in the case file, it was stated that on May 18, 2022, just five days after UST’s loss of value, Jane Street made a job offer to the head of Terraform Labs’ research department, and this person started working at the company two weeks later.
| History | Jane Street Transaction | Terraforming Movement |
|---|---|---|
| May 7, 2022 | 193 million UST sales | 150 million UST withdrawal from Curve pool |
| May 18, 2022 | Job offer to Terraform’s head of research | The period after the depreciation of UST |
