Written by: Naruto Cosmic Wave, TechFlow TechFlow
In May 2022, $40 billion evaporated in 72 hours.
That was the most devastating crash in crypto history. UST, once hailed as the "crown jewel of algorithmic stablecoins," plummeted from $1 to worthless in just a few days; Luna, which once had a market capitalization of nearly $40 billion, fell from a high of $116 to almost zero.
Millions of ordinary investors lost their savings that early summer. They refreshed their screens, staring at the continuously falling candlestick chart, not knowing what had happened or what to do.
The official explanation came quickly: the algorithm was flawed, Do Kwon lied, and the market died naturally. Most people accepted this answer, attributing the catastrophe to "yet another lesson in the crypto world," and moved on.
This answer remained unchanged for nearly four years.
Until February 23, 2026, Todd Snyder, the bankruptcy liquidator of Terraform Labs, filed a lawsuit in Manhattan federal court. Jane Street, the world's most mysterious and profitable quantitative trading giant, was thrust into the spotlight.
The question that had been silent for four years has finally received a new version of the answer.
Jane Street and LUNA's secret group chat
To understand the weight of this accusation, we must first know who the defendant is.
For most crypto users, Jane Street may be an unfamiliar name. But on Wall Street, it's legendary—a company that deliberately keeps a low profile yet has quietly become one of the most important players in the global financial markets.
Between 1999 and 2000, three former Susquehanna traders—Tim Reynolds, Robert Granieri, and Michael Jenkins—along with IBM developer Marc Gerstein, founded Jane Street in a small, windowless office in New York. Initially, they focused on ADR arbitrage, an inconspicuous activity that went largely unnoticed. However, they later set their sights on a niche market—ETFs—and made it their core battleground.
That bet changed everything.
Today, Jane Street is one of the world's largest market makers, operating simultaneously in 45 countries and over 200 trading venues. It controls approximately 24% of the primary market for US-listed ETFs, with monthly equity trading volume reaching $2 trillion. In 2024, its net trading revenue reached $20.5 billion, surpassing Bank of America and rivaling Goldman Sachs. In the second quarter of 2025, its single-quarter net trading revenue reached a record high of $10.1 billion, with a net profit of $6.9 billion, breaking the quarterly records of all major Wall Street investment banks.
With 3,000 employees, no CEO, no traditional hierarchy, and all employees receiving compensation based on the company's overall profits, Jane Street describes itself as a "collection of puzzle solvers," while outsiders call it an "anarchist commune"—flat, mysterious, and almost completely closed to the media.
Its alumni list includes a well-known figure: SBF, who joined Jane Street after graduating from MIT in 2014, honed his trading intuition there for three years, and then left in 2017 to found Alameda Research and FTX. The people this company has nurtured have profoundly changed the face of the crypto world, in whatever sense they may be.
Today, this company, known for its "low profile, precision, and always standing on the side of information advantage," is now in the dock.
The core of the accusations comes from a private group chat called "Bryce's Secret".
The founder was Bryce Pratt, an employee of Jane Street. He had been an intern at Terraform before joining Jane Street, but his old network of connections remained intact, and doors on both sides were open to him.
In February 2022, Pratt brought his former colleagues into this private channel, establishing an information pipeline connecting Terraform's internal operations with Jane Street, with Terraform's software engineers and business development head connected on the other end. The lawsuit alleges that it was through this pipeline that Jane Street gained advance knowledge of Terraform's plan to quietly withdraw funds from the Curve liquidity pool—a decision that had not been announced to the public.
At 5:44 p.m. on May 7, just 10 minutes after Terraform Labs quietly withdrew $150 million of UST from the Curve 3pool, a wallet allegedly linked to Jane Street followed suit and withdrew $85 million of UST, the largest single transaction in the pool's history.
On May 9th, the UST had already fallen to $0.8, and the signs of a collapse were undeniable. At this time, Pratt sent a message to Do Kwon and the Terraform team via group chat, suggesting that Jane Street could consider "buying Luna at a significant discount."
While reaping profits from retail investors, they also took the opportunity to salvage goods from the fire.
Besides Pratt, the defendants named in this case include Jane Street co-founder Robert Granieri, the only one of the four founders still employed, and employee Michael Huang. The lawsuit cites the Commodity Exchange Act and the Securities Exchange Act, and also raises charges of fraud and unjust enrichment, requesting a jury trial and seeking damages and the return of any profits gained.
Bloomberg cited the core statement in the lawsuit as saying that Jane Street's actions allowed it to "cover up hundreds of millions of dollars in potential risk exposure at the right time, just hours before the Terraform ecosystem collapsed."
Jump Trading and the Deeper Darkness
Jane Street's lawsuit is not an isolated incident. Two months ago, the same liquidator, Todd Snyder, sued Jump Trading, its co-founder William DiSomma, and former Jump Crypto president Kanav Kariya in Illinois federal court, seeking $4 billion in damages.
The story of Jump is, in some ways, even more shocking than that of Jane Street.
The lawsuit reveals a picture that has never been fully pieced together before: as early as May 2021, when UST first experienced a decoupling crisis, Jump secretly bought about $20 million worth of UST, stabilizing the price back to $1.
Later, the public believed the packaged story of algorithmic stablecoins; the algorithm worked, and the system was self-healing. Terraform used this to evade regulatory scrutiny, while Jump, in exchange, acquired over 61 million Luna tokens at $0.40 each, compared to a market price of approximately $90 at the time—a discount of over 99%. Jump later sold these tokens, profiting an estimated $1.28 billion according to the lawsuit.
During the final collapse in May 2022, the Luna Foundation Guard transferred nearly 50,000 bitcoins (approximately $1.5 billion) to Jump without a written agreement, ostensibly for market stabilization. The final destination of the bitcoins remains unknown, and the lawsuit states, "It is unclear whether Jump further enriched itself through this transaction."
It's worth noting that DiSomma and Kariya cited the Fifth Amendment hundreds of times to refuse to answer questions during previous SEC inquiries. Jump's subsidiary, Tai Mo Shan, settled with the SEC in 2024 for $123 million, admitting to "misleading investors." Kariya himself resigned as president of Jump Crypto that same year, citing a CFTC investigation.
More importantly, according to Jane Street's complaint, it was through Jump's information channels that Jane Street obtained some "non-public key information." The two cases are connected by an invisible thread.
But there's another half to this story.
Jane Street's response was direct: this was a "desperate lawsuit," a "transparent attempt to extract money from the company." They added that the losses suffered by Terra and Luna investors stemmed from a "billion-dollar fraud" perpetrated by Do Kwon and Terraform management themselves, and they would fight back forcefully.
This statement is correct. Do Kwon pleaded guilty to fraud and was sentenced to 15 years in prison; Terraform also paid a $4.47 billion fine. Luna's death spiral was predetermined by its mechanism design: algorithmic stablecoins are essentially systems that require continuous buying and confidence to maintain. Once panic is triggered, the arbitrage mechanism reverses, causing it to self-destruct at an exponential rate.
However, the statements "Do Kwon is guilty" and "the others are innocent" do not mutually confirm each other.
It's a fact that the building had fatal structural flaws. Whether anyone secretly emptied the most valuable items before the firefighters arrived during its collapse is a separate legal and ethical question.
Another detail worth noting is that on the same day the Jane Street lawsuit was revealed, on-chain tracking researcher ZachXBT announced that he would release "a major investigation into one of the most profitable firms in the crypto industry, where multiple employees have been using internal data for insider trading for an extended period" on February 26, 2026. He did not name names. But the delicate timing has the entire crypto Twitter community holding its breath in anticipation.
This story isn't over yet. But one thing is certain: in the crypto market, which prides itself on being "decentralized," true inequality has never disappeared. It has simply moved from bank trading desks to behind-the-chain smart contracts, continuing to exist in a more covert form.
The Luna incident may have been just the most intense tear in that rift, while those on the other side had already safely evacuated long before the wall collapsed.
"The rich get their money back in full, while the common people get their money split 30/70"—this is true in movies, and it's true in the crypto world as well.
