Jane Street's 10-Minute Trade That Toppled a $40 Billion Empire

Ten minutes. That's how long it took for $85 million to disappear after Terraform Labs quietly pulled $150 million from a crypto pool. Those ten minutes may have triggered the fastest $40 billion wealth destruction in crypto history.

Now, Terraform's bankruptcy administrator is pointing fingers at Wall Street powerhouse Jane Street, alleging the high-frequency trading firm used insider information to front-run trades that accelerated the 2022 TerraUSD collapse. The accusation: turning market manipulation into profit while millions of investors watched their savings evaporate.

The 10-Minute Window

May 7, 2022. Terraform Labs silently withdrew 150 million TerraUSD from Curve3pool, a decentralized trading platform. No announcement. No warning to the market.

Then came the crucial ten minutes.

Before Terraform told anyone what they'd done, a wallet linked to Jane Street pulled another 85 million TerraUSD from the same pool. Same platform, same timing, but with one key difference: Jane Street allegedly knew what was coming.

"Jane Street abused market relationships to rig the market in its favor during one of the most consequential events in crypto history," said Todd Snyder, the administrator pursuing the lawsuit.

Within days, TerraUSD lost its dollar peg. Luna crashed to near zero. $40 billion in market cap vanished in a week, taking down other crypto firms with exposure to the Terra ecosystem.

When Milliseconds Mean Millions

Jane Street built its fortune on speed—trading in milliseconds, profiting from tiny price differences that compound into massive gains. In traditional markets, this high-frequency approach is controversial but legal. In crypto's Wild West, the rules are murkier.

The lawsuit claims Jane Street employees Bryce Pratt and Michael Huang, along with co-founder Robert Granieri, used "material nonpublic information" from Terraform insiders. That's Wall Street speak for knowing something market-moving before everyone else—and trading on it.

While retail investors scrambled to understand why their TerraUSD was losing value, Jane Street was allegedly already positioned for the collapse. The firm's precise timing suggests they knew exactly what Terraform was planning.

The Defense: "Desperate and Baseless"

Jane Street isn't backing down. They've called the lawsuit a "desperate" and "baseless" money grab, arguing that Terraform's losses came from "multibillion-dollar fraud perpetrated by the management of Terraform Labs."

Their point isn't entirely wrong. Do Kwon, Terraform's founder, pleaded guilty to criminal charges and received a 15-year prison sentence. The Terra ecosystem was built on algorithmic promises that ultimately failed.

But timing tells a different story. On May 9, as TerraUSD started slipping, Jane Street'sPratt messaged Kwon offering to buy bitcoin or Luna. While panic gripped the market, Jane Street was positioning to profit.

The Bigger Game

This lawsuit exposes crypto's uncomfortable truth: despite promises of decentralization and democratization, information asymmetries still favor institutional players. While Jane Street allegedly leveraged insider knowledge, millions of retail investors had no idea what was happening until it was too late.

The case also highlights how traditional finance has colonized crypto. Jane Street, a firm that made its name in conventional markets, brought Wall Street tactics to a space that promised to be different.