Gate News message, April 23 — Jane Street has filed a motion to dismiss the insider trading lawsuit brought by Terraform Labs’ bankruptcy estate, arguing the case is a meritless attempt to shift blame for the Terra-Luna ecosystem collapse. In its filing with the U.S. District Court for the Southern District of New York, Jane Street and several individual defendants contend that Terraform is attempting to extract cash from the firm to cover losses from fraud that Terraform itself perpetrated.
Jane Street argues much of the Terraform case has already been litigated and resolved. Terraform founder Do Kwon pleaded guilty to conspiracy and wire fraud charges in December 2025 and is serving a 15-year prison sentence; a jury also found Terraform and Kwon civilly liable for securities fraud. The defendants stated that Kwon had even admitted he was “alone responsible for everyone’s pain.”
On the insider trading allegations, Jane Street contends Terraform’s claims are “self-defeating” because the firm’s largest trades occurred after material information about UST/LUNA’s health became public. Jane Street began acquiring a short position on May 8 and sold assets on May 7, but Terraform has failed to identify any material non-public information or “back-channel communications” that would have given Jane Street an informational edge. Jane Street also invoked the Wagoner rule, which prevents bankruptcy estates from suing third parties to recover losses caused by their own fraud, and questioned whether the trades in question took place in the U.S.
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