The court-appointed bankruptcy administrator of Terraform Labs has filed a lawsuit against market maker Jane Street for allegedly using non-public information to profit from the 2022 collapse of the Terra ecosystem.

The suit was filed Monday and accuses Jane Street insiders, including its co-founder Robert Granieri, and employees Bryce Pratt and Michael Huang of “misappropriation of confidential information and manipulation of market prices.”

According to the heavily redacted complaint, Jane Street Front directed Terraform’s cash movements around the Curve 3pool takedown and used the information acquired to unwind hundreds of millions of dollars of U.S. exposure “that accelerated Terraform’s collapse.”

The suit claims that Jane Street and Terraform first connected for OTC trading in 2018, but that trading “did not take off until February 2022” when Jane Street deployed Bryce Pratt, a former Terraform intern, to establish lines of communication with his former Terraform colleagues.

Pratt allegedly helped create these channels due to his history as a former Terraform intern, which allowed him to “seamlessly pass information from Terraform to Jane Street.”

“Given Jane Street’s interest in cryptocurrency, Pratt leveraged relationships he had developed at Terraform to provide material nonpublic information to Jane Street’s cryptocurrency office,” the complaint states.

“Jane Street abused market relations to rig the market in its favor during one of the most significant events in crypto history,” Terraform court-appointed administrator Todd Snyder said in a statement to the Wall Street Journal.

The lawsuit seeks damages and an order requiring Jane Street to disgorge profits it allegedly made from insider trading and market manipulation, along with interest, and calls for a jury trial.

Jane Street says claims are baseless

In response, a spokesperson for Jane Street denied all allegations and told the WSJ that the lawsuit was a “desperate” attempt to “extract money” and that the company would defend itself against these “opportunistic and baseless claims.”

“[..] It is well established that the losses suffered by the holders of Terra and Luna were the result of a multi-billion dollar fraud perpetrated by the management of Terraform Labs,” the spokesperson said.

Terraform collapsed in May 2022 after its algorithmic stablecoin TerraUSD lost its dollar peg, leading to one of the biggest collapses in the crypto industry, with around $40 billion disappearing from the market. Subsequently, Terraform filed for bankruptcy in 2024, while co-founder Do Kwon pleaded guilty to fraud and was sentenced to 15 years in prison.

The bankruptcy administrator also launched a lawsuit against Jump Trading in December and claims the company made secret deals with Kwon.