Terraform Accuses Jane Street of Leveraging Secret Telegram Group

The document alleges Pratt continued tapping his Terraform contacts for "defi info" that Jane Street was "very hungry for," often sending requests via Telegram with the instruction "don't share pls."

On May 7, 2022, Jane Street unstaked and sold its entire 192 million UST position in a single day, all effectively at the dollar peg, just hours before the stablecoin began its collapse, according to the complaint.

The filing alleges Jane Street later shorted UST and Luna after learning details of a confidential rescue effort, ultimately making more than $134 million across the trades.

It also alleges Jane Street later attempted to "minimize this kind of visibility going forward" by decommissioning wallets tied to the trades after a Blocktower contact told the firm a group skilled at onchain analytics had concluded Jane Street "made a 'killing'" on its activity.

“This suit is a transparent attempt to extract money when it is well-established that the losses suffered by Terra and Luna holders were the result of a multi-billion dollar fraud perpetrated by the management of Terraform Labs," a Jane Street spokesperson told Decrypt. They added that, "As demonstrated in the motion to dismiss filed in court last month, we will defend ourselves vigorously against these baseless, opportunistic claims."

Decrypt has reached out to the Terraform Labs wind-down trust for comment.

Nic Puckrin, macro analyst and co-founder of Coin Bureau, told Decrypt that insider trading remains especially difficult to police in crypto because “the lines between market-making, privileged information flows and informal communication channels have historically been more blurred.”

Still, he noted crypto has one major advantage over traditional finance: “transparent on-chain data.”

“That level of visibility can make it much easier for investigators to trace flows of funds, trading patterns, and wallet activity” in order to prove or disprove allegations, Puckrin added.

The Terra collapse

Terraform collapsed in May 2022 after the TerraUSD algorithmic stablecoin lost its dollar peg, sending sister token LUNA from above $60 to fractions of a cent within days.

The roughly $40 billion Terra implosion unleashed a crypto contagion that toppled major firms, including Celsius, Three Arrows Capital, Voyager, and eventually FTX, while erasing trillions in market value.

Terraform sought Chapter 11 protection in Delaware in January 2024, and a wind-down trust was later established to pursue recoveries on behalf of creditors.

Co-founder Do Kwon, extradited from Montenegro to face U.S. charges, pleaded guilty to conspiracy and wire fraud in December and is now serving a 15-year prison sentence.