TLDR:

• Terraform Labs’ bankruptcy administrator filed a lawsuit against Jane Street in Manhattan in February 2026.
  
• Jane Street allegedly dumped 85M UST minutes after Terraform pulled 150M UST liquidity from Curve Finance.
  
• A private chat called “Bryce’s Secret” allegedly gave Jane Street insider knowledge before the Terra-Luna collapse.
  
• Jane Street reportedly avoided over $200M in losses while retail investors suffered catastrophic and unrecoverable financial damage.

Jane Street, the prominent trading firm, faces a lawsuit filed by Terraform Labs’ bankruptcy administrator in Manhattan.

The February 2026 complaint accuses Jane Street of orchestrating the collapse of TerraUSD (UST) and LUNA in May 2022.

The event wiped out approximately $40 billion within days. It also triggered a broader crypto market downturn lasting well into 2023. Jane Street has denied all allegations, calling the lawsuit “baseless.”

The Alleged Timeline Behind the Terra Collapse

The lawsuit outlines a specific sequence of events from May 2022. According to the complaint, Terraform quietly withdrew 150 million UST from the Curve liquidity pool.

Minutes after that withdrawal, Jane Street allegedly dumped 85 million UST into the market. That move reportedly triggered immediate panic among investors and traders across the ecosystem.

The panic then accelerated UST’s loss of its one-dollar peg. Once UST depegged, LUNA’s mint-and-burn mechanism caused it to hyperinflate rapidly and uncontrollably.

This is how the $40 billion wipeout unfolded within just a few days. The lawsuit argues the sequence was not coincidental but rather a coordinated effort.

The complaint further claims Jane Street had access to insider information before the event. A former Terraform intern, who later joined Jane Street as a trader, allegedly shared critical details.

This exchange reportedly occurred through a private group chat named “Bryce’s Secret.” This alleged insider access forms a central pillar of the legal argument presented.

Because of this reported advance knowledge, Jane Street allegedly positioned itself ahead of the collapse. The firm is accused of avoiding over $200 million in losses as a result.

Additionally, the complaint claims Jane Street profited during the meltdown. Meanwhile, retail investors absorbed devastating and largely unrecoverable losses.

Broader Market Fallout and New Questions Raised

The Terra collapse did not remain isolated to LUNA and UST alone. The event created a domino effect that spread rapidly across the broader crypto market.

Several major firms with exposure to Terra faced severe liquidity crises shortly after. This chain reaction contributed directly to what became known as the 2022 crypto winter.

The lawsuit has also reignited ongoing debates about institutional manipulation in crypto markets. Analysts and observers began drawing comparisons to other unexplained market events.

Some pointed specifically to the October 10 crash, questioning whether similar tactics were deployed then. The complaint, however, does not formally allege Jane Street’s involvement in that separate event.

Jane Street has responded firmly, publicly denying every allegation contained in the lawsuit. The firm has not addressed specific claims surrounding “Bryce’s Secret” or the insider trading accusations.

Legal proceedings are currently active in Manhattan federal court. The outcome could establish an important precedent for institutional accountability in crypto.

This lawsuit stands as one of the most serious legal actions linked to the 2022 Terra collapse. It places direct scrutiny on institutional trading conduct during periods of extreme crypto market volatility. The case is expected to progress through federal court in the coming months.