Terra Bankruptcy Trustee Sues Jane Street, Accusing Them of Front-Running Trades with Insider Information

BlockBeats News, February 24th. According to the WSJ, the court-appointed bankruptcy trustee of Terraform Labs has filed a lawsuit against Jane Street in the New York Federal Court, accusing the firm of engaging in frontrunning trades using non-public insider information provided by Terra insiders during the Terra crash to profit.

The complaint alleges that Jane Street established a secret communication channel with Terraform Labs' internal staff through former intern Bryce Pratt to obtain non-public confidential information. On May 7, 2022, when Terraform Labs withdrew 150 million TerraUSD (UST) from the Curve liquidity pool without prior disclosure, Jane Street swiftly followed the withdrawal of approximately 85 million UST within less than 10 minutes via a related wallet. They conducted a "frontrunning" trade before the widespread panic in the market and the full-scale depegging of UST, illegally profiting and hastening the collapse of Terraform Labs and the Terra ecosystem.