Jane Street Accused of Using Inside Information to Profit $134M From Terra Collapse

TLDR

• Recently unsealed legal documents claim Jane Street traders joked about having an “informational advantage” before liquidating $192 million worth of TerraUSD (UST) in May 2022.
• An ex-Terraform intern, Bryce Pratt, allegedly created a covert Telegram channel named “Bryce’s Secret” with Terraform employees, potentially providing Jane Street with privileged information.
• Jane Street reportedly liquidated its entire UST holdings just nine minutes after Terraform secretly removed $150 million from a critical liquidity pool, ultimately profiting approximately $134 million through shorting strategies.
• Following the controversial trades, Jane Street traders allegedly discussed “decommissioning” their blockchain wallets after being identified by crypto analytics companies.
• Just five days after UST reached its nadir, Jane Street allegedly extended an employment offer to Terraform’s research director, who joined the firm within two weeks.

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Terraform Labs’ bankruptcy estate has submitted an amended legal complaint against prominent Wall Street trading house Jane Street, claiming the company exploited confidential inside information to liquidate $192 million in TerraUSD before the algorithmic stablecoin’s catastrophic failure in May 2022.

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The revised complaint, submitted to Manhattan’s federal court, contains significantly fewer redactions compared to the initial February 2026 filing. It introduces fresh details regarding internal correspondence, actions taken after trades were executed, and a previously confidential employment offer.

The Covert Telegram Channel

Central to these allegations is Bryce Pratt, a former Terraform intern who transitioned to Jane Street in September 2021. Court documents indicate that Pratt established a private Telegram communication channel dubbed “Bryce’s Secret” in February 2022.

This group allegedly comprised Terraform’s business development director and a principal software engineer. The legal filing contends Pratt leveraged this channel to collect “defi info” concerning Terraform’s holdings, operational strategies, and liquidity requirements.

The complaint cites internal correspondence where traders were informed they should feel “slightly pleased” about possessing an “informational advantage.” Terraform’s estate maintains this demonstrates Jane Street’s awareness that it was receiving confidential, material information rather than merely superior market intelligence.

The Critical Nine-Minute Interval

On May 7, 2022, at exactly 5:44 PM Eastern Time, Terraform Labs discreetly extracted 150 million UST from Curve’s 3pool, a vital liquidity source for the stablecoin.

Fewer than nine minutes afterward, a blockchain wallet now identified in court documents as controlled by Jane Street withdrew 85 million UST from that identical pool. The filing characterizes this as the most significant individual transaction in the chain of events that destabilized UST from its dollar peg.

Cumulatively, Jane Street liquidated approximately 192 million UST tokens at near-parity values. The firm subsequently established short positions as the algorithmic stablecoin disintegrated. Per the estate’s calculations, Jane Street generated roughly $134 million in gains as Terra’s $40 billion ecosystem imploded during subsequent days.

Wallet Decommissioning Discussion

Following these transactions, a cryptocurrency analytics company allegedly reached out to a Jane Street representative and observed the firm had “made a killing” from Terra’s meltdown.

Internal messages referenced in court filings reveal Jane Street traders became concerned about their wallets being traced on-chain. They purportedly discussed strategies to “decommission” these wallets — essentially abandoning the associated addresses and creating fresh ones to reestablish anonymity.

The bankruptcy estate contends this response indicates consciousness of wrongdoing. It maintains that traders conducting legitimate activities would not have reacted with alarm to wallet identification.

The Employment Proposition

Merely five days following UST’s lowest valuation, on May 18, 2022, Jane Street allegedly presented an employment opportunity to Terraform’s research director. He reportedly commenced employment two weeks thereafter.

The estate characterizes this recruitment as component of a systematic effort to develop relationships with Terraform insiders, complementing Pratt’s previous internship and the Telegram communication channel.

Jane Street Refutes All Claims

Jane Street has categorically rejected these accusations. In its April 2026 dismissal motion, the company characterized the lawsuit as a “transparent attempt to extract money.” It contended that losses stemmed from Do Kwon’s fraudulent activities, not its trading operations, and that the Wagoner Rule shields it from litigation by the bankruptcy estate.

The revised complaint now cites both federal securities regulations and the Commodity Exchange Act, expanding potential liability exposure. The dismissal motion remains under judicial consideration. This litigation proceeds concurrently with a separate $4 billion lawsuit initiated against Jump Trading in December 2025 for allegedly supporting UST before abandoning that support.