Jane Street is simultaneously embroiled in insider trading lawsuits related to the Terra crash and allegations of market manipulation in India. Its role in Bitcoin ETFs and derivatives structures has raised widespread questions about its price suppression and structural advantages.

Article author and source: ME News

Jane Street Group is a New York-based quantitative trading firm.

Jane Street has no CEO; according to their own description, the company operates more like an "anarchist commune."

In the first nine months of 2025 alone, they recorded $24 billion in net trading revenue, surpassing the $20.5 billion for the entire year of 2024. Their revenue for the second quarter of 2025 alone reached $10.1 billion—the highest single-quarter trading revenue record for any company in Wall Street history.

By any standard, Jane Street is one of the most profitable trading firms in the world.

This week, Terraform Labs' bankruptcy administrator filed a lawsuit in Manhattan federal court, accusing Jane Street of using insider information to profit from the Terra Luna crash in May 2022.

That crash wiped out approximately $40 billion in market value and triggered a chain reaction that ultimately dragged down Celsius, Three Arrows Capital, and FTX.

Bryce's Secret

The key figure in this matter is Bryce Pratt.

Bryce previously interned at Terraform Labs. In September 2021, he left Terraform to join Jane Street as a full-time employee.

According to litigation documents filed by bankruptcy administrator Todd Snyder, Bryce maintained communication with Terraform insiders through a chat group known as “Bryce's Secret.”

The key date was May 7, 2022.

Terraform withdrew $150 million of UST from Curve 3pool (UST's main liquidity pool). There was no public announcement.

Ten minutes later, a wallet associated with Jane Street withdrew $85 million from the same pool of UST.

Subsequently, UST began to decouple, the LUNA algorithm mechanism went out of control, token issuance increased, and the market value evaporated by approximately $40 billion.

The lawsuit alleges that Jane Street closed out its positions hours before the crash, avoiding potential losses of over $200 million. The documents state that these trades "would have been impossible to complete without inside information."

Jane Street responded that the lawsuit was "baseless".

Similarly, Jump Trading was also sued for similar reasons.

Indian market manipulation charges

This is not the first time Jane Street has encountered regulatory issues.

In July 2025, the Securities and Exchange Commission of India (SEBI) issued a 105-page penalty order, accusing Jane Street of manipulating settlement prices on the maturity dates of Bank Nifty index derivatives between 2023 and 2025.

Operating model described in regulatory documents:

• In the morning session: Large-scale buying of constituent stocks and futures pushed up the index. At the same time, a larger short option position was established.
• Afternoon: Sell stocks in the opposite direction, the index falls, and options are profitable.

The Securities and Exchange Commission of India (SEC) found that Jane Street made 365 billion rupees (approximately $4.3 billion) over two years through coordinated trading in the spot and derivatives markets, earning 73.5 billion rupees (approximately $880 million) in a single day. The regulator stated that such behavior is illegal in any country with proper financial regulation.

Jane Street has been restricted from trading and has filed an appeal. The case is still under review.

Quantitative Machines and 13F Disclosures

Since the end of 2024, traders have observed a phenomenon:

Bitcoin typically experiences a sharp drop around 10 a.m. Eastern Time—the time when the stock market opens.

Data from December 2025 shows that on several trading days, Bitcoin fell from $89,700 to $87,700 within minutes, liquidating approximately $171 million of leveraged long positions, before the price recovered.

This pattern is known in the crypto community as the "10-point blitz".

Some market observers have linked this phenomenon to the structure of ETF authorized participants.

Jane Street is one of only four authorized participants in BlackRock's IBIT program. Authorized participants have the authority to create and redeem ETF units and can engage in arbitrage between ETFs and spot markets.

The 13F filing for the fourth quarter of 2025 shows:

Jane Street holds approximately 20.31 million shares of IBIT, worth about $790 million. Previously, its holdings were close to $2.5 billion.

Meanwhile, its MSTR holdings increased by 473% in the same quarter.

However, 13F filings only disclose long equity positions, not options, futures, or swaps. Some market participants point out that ETF market makers typically hedge their equity holdings using derivatives. If undisclosed derivative positions exist, the publicly seen long exposure does not necessarily represent a net bullish stance.

This raises a market structure question: Is it possible for authorized participants to influence short-term price volatility through ETF creation/redemption mechanisms and derivatives combinations?

No regulatory body has yet made a determination that the Bitcoin ETF market structure is manipulated.

Some market observers noted that the "10-point blow" initially subsided after Terraform's lawsuit documents were released, only to resume in the third quarter of 2025. This timeline has been widely discussed, but no regulatory conclusion has yet confirmed a causal relationship.

Structural problems of 21 million

The 21 million Bitcoin limit at the protocol level is maintained collectively by nodes worldwide. However, the price discovery mechanism occurs on top of the ETF, derivatives, and spot market structures.

ETFs introduce an intermediary layer of authorized participants. Once ETFs allow physical creation and redemption, authorized participants can directly exchange Bitcoin for shares.

But if derivative exposures are not disclosed, is price discovery truly transparent?

Conclusion

Currently, the Terraform lawsuit is still pending; the Indian market manipulation case is still under appeal; and the Bitcoin ETF structure complies with current regulatory rules.

However, the combination of these three events has sparked discussions in the market about structural advantages, disclosure transparency, and price discovery mechanisms.

Although Jane Street denies any manipulation, questions remain until a regulatory conclusion is reached: does the price formation mechanism of Bitcoin, under the ETF and derivatives structure, fully reflect real supply and demand?

The answer is still under consideration.