Terraform Estate Accuses Jane Street of Insider Trading Before UST Crash

Terraform Labs created TerraUSD, or UST, as an algorithmic stablecoin designed to hold a $1 peg through its relationship with the LUNA token. The system unraveled in May 2022, erasing about $40 billion in market value and helping trigger a broader crypto-industry contagion. Terraform’s wind-down trust is now pursuing trading firms it alleges exploited privileged access before the collapse, seeking recoveries for creditors and crypto-loss claimants.

Plan administrator Todd Snyder sued Jane Street in Manhattan federal court on Feb. 23, 2026. Newly unsealed filings allege the firm obtained confidential information through a private Telegram group called “Bryce’s Secret” and sold its entire $192 million UST position on May 7, 2022, hours before the stablecoin lost its peg. Jane Street has moved to dismiss the case, arguing Terraform is trying to shift responsibility for its own fraud; the allegations have not been proven in court.

Jane Street is a U.S. quantitative trading firm and ETF market maker that provides liquidity for spot Bitcoin ETFs. Its algorithms have drawn scrutiny over concentrated selling pressure around 10 a.m. during U.S. trading. Analysis suggests, however, that ETF creation, redemption and hedging mechanisms may constrain price discovery, making the firm a focal point of allegations that it triggers a "10 a.m. sell-off."

The latest reports say there is currently no public evidence that Jane Street manipulated Bitcoin and that the controversy is more likely rooted in ETF market structure. The firm is also facing a lawsuit alleging insider trading involving Terraform Labs. Available information does not disclose the filing date, the amount at issue or the specific trading period, and the allegations remain subject to judicial proceedings.

In May 2022, Terraform Labs' algorithmic stablecoin UST lost its peg and LUNA collapsed, wiping out about $40 billion in market value. Liquidation administrator Todd Snyder sued Jane Street in the U.S. District Court for the Southern District of New York on February 23, 2026, alleging that the firm obtained nonpublic information, traded ahead of the market and avoided more than $200 million in losses. Jane Street denied the allegations.

After the lawsuit became public, the market's customary selling pressure around 10 a.m. Eastern Time, or 11 p.m. in Taipei, appeared to ease. On February 25, 2026, Bitcoin surged from about $63,900 to above $69,000 intraday, adding more than $170 billion to the total crypto market capitalization in a single day. Ether gained more than 13% and Solana more than 15%. However, there is currently no evidence that Jane Street manipulated prices during that time window.

TerraUSD (UST) was designed to maintain its $1 peg through an algorithm and LUNA, but it lost the peg in May 2022, wiping out about $40 billion in Terra ecosystem assets. Terraform Labs' liquidator now alleges that Jane Street used internal liquidity information to trade ahead of the market, bringing one of the crypto industry's biggest collapses back into the judicial spotlight.

Liquidator Todd Snyder filed suit in federal court in New York on Feb. 23, 2026, alleging that Jane Street withdrew another 85 million UST within 10 minutes of learning that Terraform planned to remove 150 million UST from Curve. After the lawsuit became public, market speculation spread that selling pressure at 10 a.m. U.S. Eastern time had disappeared. Bitcoin rebounded about 10%, from roughly $62,000 to nearly $70,000, but the manipulation claims have not been substantiated.