BlockBeats News, February 26th, according to WSJ, on February 24th, the court-appointed bankruptcy trustee of Terraform Labs filed a lawsuit against Jane Street in the New York Federal Court, accusing it of engaging in frontrunning trades using non-public insider information provided by Terra insiders during the Terra crash and profiting from it. The lawsuit alleges that Jane Street established a secret communication channel with Terraform Labs’ internal staff through former intern Bryce Pratt to obtain non-public confidential information. On May 7, 2022, Terraform Labs withdrew 150 million TerraUSD (UST) from the Curve liquidity pool without prior disclosure of intent. Jane Street then followed the withdrawal with approximately 85 million UST in less than 10 minutes through an associated wallet, completing a “frontrun” trade before the market-wide panic and full UST de-pegging, illegally profiting and accelerating the collapse of Terraform Labs and the Terra ecosystem.
A Jane Street spokesperson responded to the allegations by Terraform Labs’ bankruptcy trustee, stating that the lawsuit is an attempt to extract money from Jane Street, and Jane Street will vigorously defend its own rights against “baseless, opportunistic charges.” In addition to the Terraform lawsuit, Jane Street was accused of market manipulation in India last year, with about 4.843 billion rupees (approximately $565 million) in assets frozen and trading in the Indian securities market prohibited. There are also rumors that Chinese regulatory authorities are reviewing Jane Street’s behavior in the Chinese ETF market.
The crypto community has noted that since Jane Street was sued, the daily “10 a.m. Bitcoin dump” (EDT) has suddenly disappeared, Bitcoin has risen by 10%, increasing its market value by about $120 billion, and the BTC weekly chart has turned green for the first time after five consecutive red candles. Meanwhile, the overall cryptocurrency market capitalization has also increased by nearly $200 billion. Bloomberg ETF analyst Eric Balchunas stated, “The ‘threat’ disappeared, and that’s the vibe you feel in CT and price action today. I also get it; the big sharp intraday drops before had all but ruined every rebound and confidence. But is just removing it enough to underpin a sustained bounce? We’ll see.”
Market speculation surrounding Jane Street has once again sparked discussions on the trading mechanism of Bitcoin spot ETFs. Analysts pointed out that the creation and redemption of spot ETF shares can be completed by Authorized Participants (APs) within a regulatory exempt framework and does not necessarily require immediate buying and selling of Bitcoin on the public market; in cases like futures contango, APs may also hedge through futures and other derivatives, leading to a time gap between ETF fund inflows and spot buying pressure, and short-term price performance.
As a global top-tier quant trading giant, Jane Street has a very extensive presence in the cryptocurrency space, mainly focusing on infrastructure, DeFi, and crypto mining. Public information shows that Jane Street’s investments in crypto-native projects include: ZetaChain, Arbitrum, 1inch, Euler Finance, Membrane Labs, Kaito, Vest Exchange, and more.
On the equity side, between 2024 and 2026, Jane Street significantly increased its holdings in multiple crypto mining firms through the secondary market, including: holding approximately 5.4% of Bitfarms (BITF); holding approximately 5% of Cipher Mining (CIFR); holding approximately 5% of Hut 8 (HUT). Additionally, Jane Street participated in multiple rounds of Kraken funding last year. Jane Street is also a key liquidity provider and shareholder for Coinbase.
