Jane Street allegedly used insider info to profit from UST collapse

The collapse of TerraUSD in May 2022 was one of crypto’s most spectacular implosions, wiping out roughly $40B in value and sending shockwaves through every corner of the market. Now, more than three years later, a lawsuit from Terraform’s bankruptcy estate alleges that one of Wall Street’s most sophisticated trading firms saw it coming, because insiders told them it was about to happen.

Jane Street Group allegedly sold approximately 193 million UST, worth roughly $192M, on May 7, 2022. That was the day before UST lost its dollar peg and began its death spiral. The firm then reportedly flipped to a short position and pocketed $134M as UST and its sister token LUNA cratered toward zero.

The Telegram group at the center of it all

The lawsuit, filed by Terraform’s bankruptcy trustee in February 2026, paints a picture of a cozy information pipeline between Terraform insiders and Jane Street traders. At the center of the allegations is a private Telegram group called “Bryce’s Secret,” reportedly led by Bryce Pratt, a former Terraform intern.

According to the complaint, this group served as a channel for non-public information about the health of the Terra ecosystem. Jane Street, which served as a liquidity provider for Terraform and held substantial UST inventory, allegedly had a front-row seat to the project’s internal vulnerabilities before the rest of the market caught on.

Jane Street’s defense: nothing to see here

Jane Street filed a motion to dismiss on April 23, 2026, and its argument is essentially twofold.

First, the firm contends that all the information it acted on was already publicly available. Second, Jane Street invokes the “Wagoner rule,” a legal doctrine that generally prevents a bankruptcy estate from suing third parties for harms that the debtor itself participated in causing. Jane Street is essentially arguing that Terraform can’t play victim when it built the house of cards.

Why this case matters beyond the courtroom

This case was brought by a bankruptcy trustee, which means the legal standards and burden of proof operate differently than a typical enforcement action. The trustee doesn’t need to prove that UST was a security. They need to prove that Jane Street’s trading caused harm to the estate and its creditors.

If the case survives the dismissal motion, it could establish a meaningful precedent: that trading on non-public information obtained through privileged relationships with crypto project teams can expose firms to liability, even outside the traditional securities fraud framework.

If the court rejects Jane Street’s arguments, discovery could expose the contents of “Bryce’s Secret” and the full scope of communications between Terraform insiders and the trading firm.