Jane Street’s Secret Chat: $192M Crypto Scandal

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It seems the cosmos itself might have been watching as Terraform Labs accused Jane Street, Wall Street’s most enigmatic trading firm, of using a private Telegram group to predict the collapse of TerraUSD (UST) with the precision of a fortune-teller who’s also a stockbroker. A tale of crypto chaos, betrayal, and a chatroom that probably had more secrets than a politician’s tax returns.

Jane Street Used Terraform Group Chat For ‘Defi Info’

In a legal drama so dramatic it could make Shakespeare weep, Terraform Labs’ Todd Snyder claimed Jane Street, its co-founder Robert Granieri, and traders Bryce Pratt and Michael Huang used a Telegram group and other backchannels to “front-run” the collapse of Terraform. One might say they were playing the market like a harp-only with more greed and fewer melodies.

In February, Snyder launched a lawsuit so fiery it could melt the Arctic, accusing Jane Street of “misappropriating confidential information” and “manipulating market prices.” The court document revealed a secret group chat named “Bryce’s Secret,” which, if it were a medieval knight, would be the one who betrays his king for a bag of gold.

The channel, created on February 22, 2022, included Pratt and two colleagues, one of whom was Terraform’s Head of Business Development. A prime example of “friends don’t let friends do business with friends,” unless the friends are also millionaires with a penchant for betrayal.

Over the months leading up to the UST collapse, Pratt allegedly asked for “defi info,” Terraform’s assets, and strategies, gaining an advantage so vast it could’ve powered a small country. One might say he was playing the market like a pianist-only with more spreadsheets and fewer concertos.

“Using that insider information, Jane Street sold off its UST at the opportune moment-on May 7, 2022-to maximize its own profits and avoid substantial losses,” the Terraform estate claimed. A masterclass in market manipulation, if such a thing exists.

“Within hours of Jane Street selling its UST holdings, UST was depegged from $1, and the entire Terraform ecosystem, including the UST and Luna cryptocurrencies, was in a death spiral. Jane Street did not stop there: using the confidential information it learned, it then took short positions in UST and Luna to profit from the crash it helped catalyze,” it continued. A financial tango so intricate, it could make a ballet dancer jealous.

As a result, Jane Street exited its roughly $193 million UST position near par and allegedly made an additional $134 million from UST and LUNA shorts. A profit so large, it could buy a small island-assuming the island isn’t already owned by a crypto billionaire.

Insider Trading Fueled UST’s ‘Death Spiral’

The filing affirmed that Jane Street “pulled the rug out from Terraform and its investors when it liquidated its entire holding in a single trading day,” suggesting that if the Wall Street giant had not flooded the market and triggered the initial depeg, “the irreversible UST death spiral that led Terraform to suffer significant losses may not have occurred.” A bit like saying a fire might not have started if you’d stopped throwing gasoline on it.

Therefore, the estate considers that Jane Street’s market manipulation before and during the May 2022 depeg event damaged the ecosystem, and requested that the Court find that the defendants violated the Commodities Exchange Act and “award the amount that Jane Street profited and the losses they avoided as a result of their manipulation of the market and trades supported by material non-public information.” A legal request so detailed, it could’ve been written by a lawyer with a PhD in sarcasm.

It’s worth noting that Jane Street filed a motion to dismiss the lawsuit in April, alleging that the company’s estate attempted to “extract cash from Jane Street to foot the bill for a fraud that Terraform itself perpetrated on the market.” A classic case of “the pot calling the kettle black,” if the pot were also a multi-billion-dollar hedge fund.

Jane Street argued that Terraform’s management was responsible for the multi-billion-dollar collapse and affirmed that its controversial transactions came after the damaging information about UST and LUNA had already been made public. A noble defense, if one ignores the fact that “public” information is often just a fancy word for “everyone’s guessing.”

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2026-05-21 19:15