Jane Street asks SDNY to dismiss Terra insider suit

Jane Street filed a motion in the U.S. District Court for the Southern District of New York asking the court to dismiss a February lawsuit by Terraform Labs’ court-appointed administrator, Todd Snyder.

Snyder sued Jane Street, co-founder Robert Granieri and two employees, Michael Huang and Bryce Pratt, alleging the trading firm profited from trades that relied on nonpublic information during the May 2022 collapse of Terra’s UST stablecoin. The complaint asserts Pratt, who interned at Terraform until September 2021, used a private channel to pass confidential details. The suit says Jane Street sold UST on May 7, 2022, to maximize gains and avoid losses as the stablecoin lost its dollar peg.

In its motion, Jane Street — a New York-based high-frequency trading firm that manages roughly $45 billion in assets — disputes those claims. The filing describes the complaint as “self-defeating” and notes the 85 million UST sale highlighted by the administrator occurred, the filing states, “ten minutes after the supposed material non-public information was visible to the market.” The firm says the May 7 sale responded to UST’s deteriorating peg rather than confidential tips.

The filing also lays out the firm’s trading timeline. Jane Street reports it began selling UST on May 7 and opened short positions against UST and LUNA between May 8 and May 13. The firm contends it started building short positions on May 8, before any alleged insider information about a proposed rescue fundraising effort could have been shared.

The collapse of UST and the Terra blockchain’s LUNA in May 2022 erased about $40 billion in investor value and triggered broader market fallout that preceded other failures in the crypto sector. Terraform’s founder, Do Kwon, was later convicted of fraud and received a 15-year prison sentence.

Snyder has brought related claims against other trading firms. In December he sued Jump Trading and affiliated entities, accusing them of market manipulation and other misconduct linked to the Terra collapse. Jump responded in March by characterizing Snyder’s complaint as an attempt to avoid a $4.4 billion penalty the firm faced from the U.S. Securities and Exchange Commission.

Jane Street’s motion was filed in the Southern District of New York. Judges in that court generally take about 60 days to rule on such motions. If the court denies dismissal, the case will continue through standard civil litigation procedures.