Original Article Title: "The $40 Billion Crypto Crash That Disappeared, Someone Knew the Ending 10 Minutes Early"

Original Article Author: Cosmos Naruto, Deep Tide TechFlow

In May 2022, $40 billion evaporated in 72 hours.

It was the most brutal crash in crypto history. The algorithmic stablecoin once hailed as the "Algorithmic Stablecoin King" plummeted from $1 to zero in a matter of days; Luna, once valued at nearly $40 billion, fell from a high of $116 to near zero.

Millions of ordinary investors lost their savings that early summer, refreshing their screens, watching the ever-falling candlestick chart, not knowing what was happening or what to do.

The official explanation came quickly: a flaw in the algorithm's design, a lie from Do Kwon, the market died naturally. Most people accepted this answer, attributing the disaster to "another lesson in the crypto world," and then moved on.

This answer held for almost four years.

Until February 23, 2026, when Todd Snyder, the bankruptcy trustee of Terraform Labs, filed a complaint with the Manhattan Federal Court. Jane Street, the world's most mysterious and profitable quantitative trading giant, was thrust into the spotlight.

That silent question that lingered for four years finally had a new version of an answer.

Jane Street and the Secret Chat of LUNA

To understand the weight of these allegations, one must first know who the defendant is.

For most crypto users, Jane Street may be an unfamiliar name. But on Wall Street, it is legendary—a deliberately low-profile entity that quietly became one of the most important players in the global financial market.

Between 1999 and 2000, three former Susquehanna traders, Tim Reynolds, Robert Granieri, Michael Jenkins, along with IBM developer Marc Gerstein, founded Jane Street in a small windowless office in New York. Initially, they engaged in ADR arbitrage, unassuming and unnoticed. But they later targeted an ETF, still a niche market at the time, and made it their core battlefield.

This Bet Changed Everything.

Today's Jane Street is one of the world's largest market makers, operating in 45 countries across more than 200 trading venues, holding approximately 24% of the US-listed ETF primary market share, with a monthly equities trading volume of up to $2 trillion. In the full year of 2024, its net trading revenue reached $20.5 billion, surpassing Bank of America and rivaling Goldman Sachs. In the second quarter of 2025, its single-quarter net trading revenue soared to $10.1 billion, with a net profit of $6.9 billion, breaking all major Wall Street investment banks' quarterly records.

With 3,000 employees, no CEO, no traditional hierarchy, and compensation distributed to all based on the company's overall profits, Jane Street describes itself as a "collection of puzzlers," while outsiders call it an "anarchist commune," flat, mysterious, and nearly completely closed to the media.

Among its alumni is a well-known figure, SBF, who joined Jane Street in 2014 after graduating from MIT, honed his trading instincts here for three years, then left in 2017 to establish Alameda Research and FTX. The people cultivated by this company have profoundly transformed the face of the crypto world, in every sense of the word.

Today, this company known for being "low-key, precise, and always on the side of information advantage" has found itself in the defendant's seat.

And at the heart of the accusations is a private chatroom called "Bryce's Secret."

The creator is Jane Street employee Bryce Pratt. He was once an intern at Terraform, then entered Jane Street, but the old connections were not severed, as both sides' doors remained open to him.

In February 2022, Pratt brought his former colleagues into this private channel, establishing a conduit connecting Terraform's internal operations with Jane Street, with Terraform's software engineers and business development leads on the other end. The complaint alleges that it was through this conduit that Jane Street learned in advance of Terraform's quiet plan to disinvest from the Curve liquidity pool, a decision not yet disclosed to the public.

At 5:44 PM on May 7th, after Terraform Labs quietly withdrew $150 million UST from the Curve 3pool, a wallet allegedly associated with Jane Street siphoned off $85 million UST just 10 minutes later, marking the largest single transaction in the pool's history.

On May 9, UST had plummeted to $0.8, and the signs of a crash were undeniable. At this time, Pratt messaged Do Kwon and the Terraform team in a group chat, suggesting that Jane Street could consider "buying Luna at a steep discount."

While harvesting retail investors, they were also conveniently preparing to loot the burning house.

The named defendants in this lawsuit, in addition to Pratt, include Jane Street co-founder Robert Granieri, the only remaining founder among the four, and employee Michael Huang. The complaint references the Commodity Exchange Act, the Securities Exchange Act, alleges fraud and unjust enrichment, demands a jury trial, seeks restitution, and disgorgement of profits.

Bloomberg quotes a key statement from the complaint: Jane Street's actions allowed it to "liquidate hundreds of millions of dollars of potential risk at the exact right moment, just hours before the Terraform ecosystem collapsed."

Jump Trading and Deeper Darkness

Jane Street's lawsuit is not an isolated incident. Two months ago, the same liquidator, Todd Snyder, filed a lawsuit in an Illinois federal court against Jump Trading and its co-founders William DiSomma, and former Jump Crypto CEO Kanav Kariya, seeking $40 billion.

Jump's story, in some ways, is even more chilling than Jane Street's.

The complaint reveals a previously unconstructed picture: back in May 2021, during the first UST de-pegging crisis, Jump secretly stepped in to buy around $20 million worth of UST, stabilizing the price back to $1.

Later, the public bought into the wrapped algorithmic stablecoin narrative, the algorithm worked, and the system self-healed. Terraform evaded regulatory scrutiny through this, and Jump, acting as an exchange, acquired over 61 million Luna tokens at a price of $0.40 each, when the market price was around $90, at a discount exceeding 99%. Jump later sold these tokens, with estimated profits of around $1.28 billion according to the complaint.

Then, during the final collapse in May 2022, the Luna Foundation Guard transferred nearly 50,000 bitcoins (around $1.5 billion) to Jump without a written agreement, ostensibly for shoring up the market. The final destination of the bitcoins remains unclear to this day, with the complaint stating, "It is not yet clear whether Jump further lined its pockets through this."

It is worth noting that DiSomma and Kariya, in a previous SEC inquiry, invoked the Fifth Amendment hundreds of times to refuse to answer. Jump's subsidiary Tai Mo Shan settled with the SEC in 2024 for $123 million, admitting to "misleading investors." Kariya himself resigned from his position as President of Jump Crypto that same year citing a CFTC investigation.

More crucially, as per the allegations in the Jane Street lawsuit, it was through Jump's information channels that Jane Street was able to access some "nonpublic key information." Two cases, linked together by an invisible thread.

But this story has another half.

Jane Street's response was straightforward: This is a "desperate lawsuit," a "transparent attempt to extract money from the company." They added that the losses of Terra and Luna investors stemmed from the "billions of dollars in fraud" perpetrated by Do Kwon and the Terraform management themselves, and they intend to vigorously counter.

This statement is not wrong. Do Kwon admitted to the fraud and was sentenced to 15 years in prison; Terraform also paid a $4.47 billion fine. The death spiral of Luna was inherently designed: an algorithmic stablecoin is fundamentally a system that requires sustained buying pressure and confidence to maintain; once triggered by panic, the arbitrage mechanism operates in reverse, self-destructing at an exponential rate.

However, the notions of "Do Kwon Guilty" and "Others Innocent" are not mutually exclusive.

A building with fatal structural flaws is a fact. Whether someone took advantage to secretly empty the most valuable contents inside before the firefighters arrived is a separate legal and moral issue.

One more detail deserves attention. On the same day the Jane Street lawsuit was exposed, on-chain sleuth ZachXBT announced that on February 26, 2026, he would release a "major investigation into a highly profitable institution in the crypto industry, where multiple employees have engaged in insider trading using internal data." He did not name names. But the subtle timing of this announcement has the entire crypto Twitter holding its breath in anticipation.

This story is not over yet. But one thing can already be confirmed: in the crypto market that boasts of "decentralization," true asymmetry has never disappeared; it has merely shifted from the bank's trading desk to behind the scenes of on-chain smart contracts, continuing to exist in a more covert form.

The Luna Event may have been just the most intense tear in that crack, and those who stood on the other side of the rift had safely evacuated long before the wall collapsed.

“The aristocrat's money is returned in full, while the commoners' money is split seventy-thirty,” as it is in the movie, so it is in the crypto world.

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