Terraform Labs Trustee Sues Jane Street Over Alleged UST Frontrunning and Insider Trading During Terra Collapse

On February 24, Terraform Labs' court-appointed bankruptcy trustee initiated a lawsuit in the U.S. District Court for the Southern District of New York, accusing Jane Street of frontrunning TerraUSD (UST) trades and profiting from material, nonpublic information during the 2022 Terra ecosystem collapse, as reported by The Wall Street Journal. The complaint alleges Jane Street utilized a secret communication channel with Terraform Labs employees, facilitated by former intern Bryce Pratt, to gain confidential data. Specifically, after Terraform Labs withdrew 150 million UST from the Curve liquidity pool on May 7, 2022, without public disclosure, Jane Street-linked wallets allegedly withdrew approximately 85 million UST within minutes, purportedly yielding illegal gains and accelerating the ecosystem's breakdown. Jane Street has dismissed the lawsuit as 'baseless and opportunistic,' vowing to contest the claims.