Jane Street has filed a motion to dismiss the insider trading lawsuit brought by Terraform Labs' bankruptcy estate over trading activity during the May 2022 collapse of UST and LUNA, according to a post from Coin Bureau summarizing the filing. The estate alleges that Jane Street traded on material nonpublic information while the algorithmic stablecoin was losing its peg. Jane Street argues the complaint does not establish that it owed any duty to Terraform or that it held information the rest of the market did not.
The UST depeg in May 2022 wiped roughly $40 billion of market value from the Terra ecosystem in under a week and is still the largest single stablecoin failure on record. Do Kwon, Terraform's co-founder, was convicted on US fraud charges in 2025. The bankruptcy estate has since been working through a wave of clawback and insider trading actions aimed at recovering funds for creditors.
What the estate is alleging
The estate's theory is that Jane Street, which acted as a liquidity provider across major venues trading UST and LUNA, had access to early signals that the peg was breaking and positioned accordingly before the information became public. That kind of claim typically requires plaintiffs to show the defendant owed a fiduciary or contractual duty to the counterparty, or that the information was obtained through a breach of such a duty.
Jane Street's motion, per the filing summary, pushes back on both fronts. The firm argues it was a market maker operating under ordinary trading arrangements, not a fiduciary of Terraform or UST holders, and that the price action and on-chain data were visible to anyone watching the market. In other words, Jane Street is framing the trade as informed market making rather than insider trading.
Why a dismissal motion matters now
A motion to dismiss is a procedural filter, not a verdict. If the judge grants it, the case ends before discovery. If the judge denies it, the estate gets access to trading records, internal communications, and risk-desk notes from one of the most secretive quantitative firms on Wall Street. That second outcome is what makes this filing consequential even at this early stage.
Terraform's estate has already settled or litigated with several other counterparties, and the outcomes of those actions have been mixed. The insider trading theory is harder to win than a standard fraudulent transfer claim because it requires proving both possession of nonpublic information and a duty to refrain from trading on it. Courts have been skeptical of applying traditional insider trading doctrine to trading around algorithmic stablecoins, where the underlying mechanics are publicly coded and observable on-chain.
Stablecoin risk after UST
For crypto users, the UST episode remains the baseline cautionary tale for stablecoin exposure. Uncollateralized and undercollateralized designs can unwind in hours when reserve logic or market-maker support breaks. Cards and payment rails that settle in USDC or USDT today are structurally different, but the failure mode is instructive: once confidence cracks, the exit queue forms faster than any peg mechanism can absorb.
The broader market today is calmer. Bitcoin is trading at $77,971 (-0.4% on the day), Ethereum at $2,316 (-1.6%), and the Fear and Greed Index sits at 59 (Neutral) as of April 24, 2026. The volatility that tore through crypto in May 2022 is not the current regime, but the legal tail from that period is still working through courts three years later.
Trader conduct vs. market making
The Jane Street filing sharpens a question the industry has been avoiding: where is the line between informed market making and insider trading in crypto markets that have no formal disclosure framework? Traditional securities law assumes corporate insiders, material nonpublic information, and a duty of trust. A stablecoin peg break has none of those neatly defined categories. How the court rules on this motion will signal how US judges plan to map old doctrine onto new instruments.
If the estate survives dismissal and reaches discovery, Jane Street's UST trading blotter would become one of the most closely read court exhibits in crypto litigation history. If the motion is granted, it sets a precedent that could narrow the estate's options against other trading firms facing similar claims.
Overview
Jane Street has asked a court to dismiss Terraform Labs' insider trading lawsuit over its UST trading during the May 2022 depeg. The estate says Jane Street traded on nonpublic information; Jane Street says the complaint fails to establish a duty or material nonpublic information. A ruling will determine whether the case proceeds to discovery and sets the tone for how US courts treat stablecoin trading claims.
