Jane Street Group allegedly unloaded $192 million of TerraUSD (UST) before the stablecoin’s May 2022 collapse, then made about $134 million betting against it, according to newly unsealed Manhattan federal court filings reported by CoinDesk.
The claim comes from the administrator winding down Terraform Labs’ bankruptcy estate, which says a private Telegram channel called “Bryce’s Secret” gave Jane Street an informational edge as UST began to break. Jane Street has denied the allegations and asked the court to dismiss the case.
A private Telegram channel named ‘Bryce’s Secret’ moves to the center
The amended complaint says Bryce Pratt, a former Terraform intern who later worked at Jane Street, kept a private Telegram backchannel with former Terraform colleagues. The estate alleges that channel carried nonpublic information while UST was under pressure.
The suit also names Jane Street co-founder Robert Granieri and trader Michael Huang. It brings claims under federal securities laws and the Commodity Exchange Act, and seeks to claw back profits for Terraform creditors.
The complaint’s theory is blunt: Jane Street was not merely reading public market signals. Terraform’s estate alleges the firm traded with information from inside Terraform before UST’s collapse.
One internal exchange cited in the filing says Pratt joked that colleagues should be “slightly pleased” about having an “informational advantage.”
That phrase now matters. It gives the estate a clean narrative to argue that Jane Street understood the information gap before selling UST near par and taking short positions.
The May 7 Curve trades are the lawsuit’s pressure point
The most consequential date in the complaint is May 7, 2022. Terraform allegedly withdrew $150 million of UST liquidity from a Curve Finance pool, and Jane Street allegedly sold $85 million of UST on Curve just nine minutes later.
Curve is central to the case because stablecoin pools can expose stress quickly. When liquidity shifts and large swaps hit, a token’s peg can come under visible pressure.
The estate says Jane Street exited roughly 193 million tokens that day, selling its entire UST position near par before the algorithmic stablecoin collapsed. Public postmortems had long focused on a large Curve swap that helped push UST off its $1 peg; the lawsuit now alleges the wallet behind that swap belonged to Jane Street.
The filing also alleges that Jane Street built short positions that produced roughly $134 million as Terra’s $40 billion failure unfolded.
MLXIO analysis: The estate’s strongest factual hook is timing. A large liquidity withdrawal by Terraform, followed minutes later by a large Jane Street sale from the same pool, gives the complaint a sequence a court can test against messages, trade records and wallet data.
Jane Street says Terraform is blaming traders for Terraform’s own fraud
Jane Street has rejected the case as an effort to shift blame away from Terraform’s own conduct.
“This suit is a transparent attempt to extract money when it is well-established that the losses suffered by Terra and Luna holders were the result of a multi-billion dollar fraud perpetrated by the management of Terraform Labs,” a Jane Street spokesperson said. “As demonstrated in the motion to dismiss filed in court last month, we will defend ourselves vigorously against these baseless, opportunistic claims.”
That defense puts the case on two tracks. One is factual: what was said in “Bryce’s Secret,” who saw it, and whether it informed trades. The other is legal: whether Terraform’s estate can recover money from a third-party trading firm after Terraform’s own collapse.
The estate is leaning on a 2023 federal court ruling in a separate Securities and Exchange Commission case that found UST and Luna qualified as securities. That finding strengthens the securities-law frame of the new complaint, though it does not prove Jane Street’s liability.
The suit also cites internal communications after the collapse. According to the complaint, when a crypto analytics firm later told a Jane Street contact the firm had “made a killing,” traders discussed how their wallets had been identified and how to “decommission” them.
The creditor recovery fight turns on messages, wallets and trading data
For Terraform creditors, the lawsuit is not only about blame. It is an asset-recovery effort.
The estate wants disgorgement of profits and other remedies that could flow back to creditors. That makes the case part of the broader financial cleanup from Terra’s collapse, not just a reputational fight over one trading firm’s role.
The amended complaint says Jane Street offered Terraform’s head of research a job on May 18, 2022, five days after UST hit bottom. He started two weeks later, according to the filing.
That detail does not prove insider trading. But it gives the estate another relationship to probe as it tries to show Jane Street had privileged access to Terraform insiders during the crisis window.
For readers tracking similar private-information disputes, MLXIO has covered the adjacent question of alleged trading-edge abuse in prediction markets in $409K Insider-Trading Claim Hits Polymarket and Kalshi. The pressure on crypto firms and trading platforms also sits beside broader business strain covered in 47% Revenue Drop Hits Robinhood Crypto as COO Walks.
‘Bryce’s Secret’ now faces the discovery test
The immediate fight is procedural. Jane Street wants dismissal; Terraform’s estate wants the case to move far enough to force production of internal records.
If the complaint survives, the evidence battle could center on:
- Telegram records: What was shared in “Bryce’s Secret,” and when.
- Trading data: Whether Jane Street’s UST sales and shorts align with alleged nonpublic information.
- Wallet attribution: Whether the Curve wallet can be tied to Jane Street.
- Internal messages: How traders discussed the trades after blockchain analysts identified wallets.
- Witness testimony: What Pratt, Terraform insiders and Jane Street personnel say under oath.
The watch item is narrow but consequential: whether the court treats “Bryce’s Secret” as a central insider-information channel or a disputed side issue. More unsealed filings or a ruling on Jane Street’s dismissal bid will decide whether this becomes a full evidence fight over one of crypto’s most expensive collapses.
Disclaimer: This MLXIO analysis is for informational and educational purposes only. It is not financial, investment, legal, tax, or professional advice. It does not provide buy, sell, hold, price-target, portfolio, or personalized recommendations. Verify information independently and consult qualified professionals before making decisions.
Impact Analysis
- The case could test how insider-trading rules apply to stablecoins and crypto market structure.
- Terraform creditors may recover funds if the estate proves Jane Street profited from nonpublic information.
- The allegations put private messaging channels under scrutiny as potential sources of market-moving information.
