Jane Street: Why a Wall Street Giant Keeps Appearing in Crypto’s Biggest Collapses

Jane Street, a major quantitative trading firm and market maker, is under scrutiny following a lawsuit from Terraform Labs' bankruptcy estate, which accuses the firm of insider trading related to the May 2022 collapse of TerraUSD (UST) and LUNA. The lawsuit alleges Jane Street used non-public information about Terraform's liquidity withdrawals to exit positions and profit before UST depegged, accelerating the collapse that wiped out $40 billion. Jane Street denies these allegations and intends to defend itself in court.

The firm's name has also indirectly surfaced in connection with the FTX collapse because former FTX founder Sam Bankman-Fried and Alameda CEO Caroline Ellison both previously worked at Jane Street, highlighting the firm's role as a training ground for quantitative traders, though Jane Street itself faces no accusations of wrongdoing in the FTX case.

As a market maker, Jane Street provides liquidity across various assets, including crypto, which naturally places it close to major market events. While its trading activity is visible, the Terraform lawsuit is the first major legal claim directly accusing the firm of causing a crypto failure. The legal outcome could set precedents for interpreting insider information in decentralized markets.

(Source：BeInCrypto)