Terraform Labs has accused Jane Street, one of Wall Street’s largest trading firms, of participating in an insider trading scheme involving a private Telegram group to gain advance knowledge of TerraUSD’s (UST) impending collapse. The allegations stem from an amended complaint filed by Terraform’s administrator, who claims Jane Street traders used confidential information shared through this group to dump their stablecoin holdings hours before UST lost its dollar peg.
The complaint centers on a secret Telegram channel named “Bryce’s Secret,” reportedly created by Bryce Pratt—a former Terraform intern turned Jane Street trader—alongside other insiders, including Terraform's Head of Business Development. According to court documents, the group was formed to share sensitive “defi info” about Terraform’s assets, liquidity needs, and strategic plans. Jane Street allegedly leveraged this privileged communication starting in February 2022 to time their trades and avoid losses.
On the trigger date, May 7, 2022, Jane Street moved swiftly to sell off its nearly $193 million UST position, resulting in the token’s sharp depeg from its $1 value. Following these sales, UST and Terra’s LUNA cryptocurrency spiraled downward. The complaint further accuses Jane Street of taking short positions on both tokens to profit from the ensuing crash, reportedly earning an additional $134 million from these bets. Terraform’s filing suggests that this market manipulation accelerated the collapse, inflicting substantial damage on investors and the broader ecosystem.
The lawsuit alleges that Jane Street’s actions breached the Commodity Exchange Act by misappropriating non-public information and colluding to manipulate market prices. It calls on the court to hold the firm and the implicated traders accountable for their role in the depeg event and for enriching themselves at Terraform’s expense. The case is ongoing in Manhattan federal court as part of a broader effort to seek reparations for losses linked to the Terra ecosystem’s downfall.