Jane Street Faces Insider Trading Claims Over TerraUSD Collapse in Unsealed Court Filing

Allegations that Wall Street quantitative trading giant Jane Street secretly obtained non-public information ahead of TerraUSD (UST)’s 2022 depegging have resurfaced after newly unsealed court filings pointed to a private Telegram channel allegedly used as an insider ‘backchannel’ into Terraform Labs.

The claims appear in a complaint filed in the Terraform Labs bankruptcy proceedings and unsealed in U.S. court records. According to the filing, Jane Street maintained a private Telegram group called “Bryce’s Secret” with Bryce Pratt—now described as a systems developer at the firm—who previously worked as an intern at Terraform Labs. The complaint argues that this channel provided Jane Street access to information not available to the broader market in the days surrounding UST’s collapse.

At the center of the lawsuit is the assertion that Jane Street used the alleged information advantage to ‘front-run’ market moves and unwind UST exposure shortly before the algorithmic stablecoin lost its dollar peg in May 2022. The filing contends that such trading activity did not merely profit from volatility, but “accelerated” the breakdown of the Terra ecosystem—an event that ultimately erased roughly $40 billion in market value across Terra-related assets and triggered a wider loss of confidence in high-yield DeFi structures.

The case also highlights a separate sequence of transactions that the complaint characterizes as unusually well-timed. On May 7, 2022—Saturday ET—Terraform Labs allegedly withdrew about $150 million worth of UST from the Curve 3pool liquidity pool. Less than 10 minutes later, an $85 million single swap hit the same pool, described in the filing as the largest one-off swap in that pool’s history at the time. The complaint argues the trade “triggered” rapid selling pressure in UST and helped set off the cascade that followed. However, the unsealed document reportedly redacts key details and does not identify the party behind the $85 million swap.

The allegations are notable because they attempt to map traditional finance concepts—such as insider trading, misuse of confidential information, and market manipulation—onto DeFi market structure, where liquidity pools, automated market makers, and pseudonymous actors complicate enforcement and evidentiary standards. If the court allows the claims to proceed, the litigation could become a reference point for how U.S. legal theories around ‘material non-public information’ are applied to on-chain markets that are transparent in transaction data but opaque in intent and off-chain communications.

Terraform Labs’ court-appointed trustee, Todd Snyder, filed the lawsuit on Feb. 23, 2026, in federal court in Manhattan, naming Jane Street, co-founder Robert Granieri, and employees Bryce Pratt and Michael Huang. The complaint alleges “misuse of confidential information and market price manipulation,” and seeks to recover alleged unjust gains and additional damages, with the stated aim of distributing proceeds to Terraform Labs creditors and investors who suffered losses in the 2022 collapse.

Jane Street has pushed back aggressively. In April, the firm moved to dismiss the case, arguing the lawsuit is an attempt to shift the cost of Terraform Labs’ own misconduct onto a third party. In comments previously reported by Cointelegraph, a Jane Street spokesperson said losses borne by Terra and LUNA holders stemmed from “billions of dollars of fraud” by Terraform Labs’ leadership, framing the litigation as an effort to extract funds rather than establish wrongdoing at the trading firm.

The dispute lands against the backdrop of Jane Street’s growing prominence in global markets. Reuters has reported that the firm generated $39.6 billion in trading revenue in 2025, underscoring both its scale and the sensitivity of claims that it exploited privileged information in an event that became one of crypto’s most consequential failures.

For now, the unsealed filings raise fresh questions about who benefited from the earliest dislocations in UST liquidity and whether off-chain communications played a determinative role in trades that appeared to anticipate a historic break. The court’s next decisions—particularly on dismissal and discovery—are likely to shape how far the Terraform estate can probe trading records and private messages, and how sharply DeFi-era conduct may be judged through the lens of traditional market integrity rules.