Jane Street Group has asked a federal court in Manhattan to dismiss an insider-trading lawsuit brought by Terraform Labs’ bankruptcy estate, seeking a ruling “with prejudice” that would prevent the estate from refiling the same claims. The motion, filed in the Southern District of New York, targets allegations tied to the May 2022 collapse of TerraUSD and Luna.
The estate, led by plan administrator Todd Snyder, alleges Jane Street used non-public information around Terraform’s Curve 3pool withdrawals before the Terra ecosystem unraveled. The complaint centers on a May 7, 2022 sequence in which Terraform allegedly withdrew 150 million UST from Curve’s 3pool, followed within minutes by an 85 million UST withdrawal from a wallet the estate links to Jane Street.
Jane Street rejects the estate’s trading theory
Jane Street denies the core accusation. The firm says it neither received nor traded on non-public information, arguing that the complaint lacks factual support and mischaracterizes lawful trading activity during a public market crisis. Its motion frames the lawsuit as an attempt by Terraform’s estate to shift responsibility for losses caused by Terraform’s own misconduct.
The defense leans on standing, jurisdiction and prior misconduct
Jane Street’s dismissal bid is built around threshold legal defenses as much as factual denial. The firm argues that the estate cannot use bankruptcy litigation to recover from third parties for harm rooted in the debtor’s own fraud, invoking doctrines such as in pari delicto and related standing limits.
The motion also challenges whether the alleged decentralized-finance trades fall within U.S. securities-law jurisdiction, a question that could matter well beyond the Terra case. If the court accepts Jane Street’s extraterritoriality argument, it may narrow how U.S. plaintiffs pursue claims tied to offshore or on-chain liquidity activity.
The case is a direct warning that large on-chain liquidity events can become litigation triggers years later. Firms operating around visible withdrawals, liquidity-pool shifts and distressed stablecoin flows may need stronger documentation around information sources, trade rationale and jurisdictional exposure.
If Jane Street wins dismissal with prejudice, Terraform’s estate would lose a potential recovery path tied to the trading firm. If the case survives, it could expand legal risk for sophisticated counterparties accused of acting on privileged information in decentralized markets.