Jane Street Faces Allegations Over Bitcoin ETF Structure and Price Discovery Impact

The bankruptcy estate of Terraform Labs has filed a lawsuit accusing Jane Street of insider trading, prompting debate over whether the firm's role in Bitcoin ETFs affects price discovery. Bitwise advisor Jeff Park argues that a regulatory carve-out in Regulation SHO creates a "grey window" where authorized participants like Jane Street, JPMorgan, and Goldman Sachs can short without standard locate requirements, potentially weakening spot-buying incentives. Park concludes that no authorized participant is directly pushing Bitcoin's price down, but the ETF structure may undermine the integrity of the price discovery process, a view that several market participants dispute.