Jane Street Faces Terra Backchannel Claims

Jane Street is facing renewed scrutiny after newly unsealed filings in the Terraform Labs bankruptcy case alleged that the trading firm used a private Telegram channel to obtain nonpublic information before TerraUSD collapsed in May 2022.

Jane Street denies the allegations and has asked a Manhattan federal court to dismiss the lawsuit with prejudice. The claims are part of a lawsuit filed in February by Terraform’s court-appointed plan administrator.

Suit Alleges $192M UST Exit Before Depeg

The complaint alleges Jane Street used a private Telegram group called “Bryce’s Secret” to help sell about $192 million of UST near par before the stablecoin fully lost its peg. The suit also claims Jane Street later made about $134 million betting against UST as the Terra ecosystem unraveled.

Terraform’s collapse wiped out roughly $40 billion in value across UST and Luna, making it one of the largest failures in crypto history. The allegations remain unproven.

Bryce Pratt Sits at Center of Telegram Claims

A central figure in the case is Bryce Pratt, a former Terraform intern who later worked at Jane Street. The complaint alleges Pratt used the Telegram channel to relay material nonpublic information from current and former Terraform employees to Jane Street traders and executives.

The named Jane Street figures include co-founder Robert Granieri and trader Michael Huang, according to reports summarizing the complaint.

One key allegation is that Jane Street sold about 85 million UST shortly after Terraform withdrew 150 million UST from a Curve liquidity pool on May 7, 2022. The complaint says that trade came after alleged private liquidity information was shared through the backchannel.

Jane Street Denies Insider Trading Allegations

Jane Street says its trading was based on public information and that Terraform is trying to shift blame for its own misconduct. The firm also argues that the complaint fails to identify any actual backchannel message disclosing the timing of Terraform’s liquidity move.

Jane Street has asked the court to dismiss the case with prejudice, which would prevent the same claims from being refiled.

If the case survives dismissal, discovery could bring more attention to internal chats, trading records and market-maker activity during Terra’s final days. For now, the case remains an allegation-heavy dispute over what Jane Street knew, when it knew it and whether any private Terraform information influenced its UST trades.