Written by: Cosmic Wave Naruto, Deep Tide TechFlow

In May 2022, 40 billion dollars evaporated within 72 hours.

That was the most disastrous crash in crypto history. UST, once hailed as the "crown of algorithmic stablecoins," plummeted from 1 dollar to worthless in just days; Luna, which had a market value of nearly 40 billion dollars, fell from a high of 116 dollars to nearly zero.

Millions of ordinary investors lost their savings that early summer, refreshing their screens, staring at the plunging K-line, not knowing what was happening or what to do.

The official explanation came quickly: flawed algorithm design, Do Kwon lied, the market inevitably died. Most accepted this answer, categorizing the disaster as "yet another lesson from the crypto world," and then continued on.

This answer lasted for nearly four years.

Until February 23, 2026, Todd Snyder, the bankruptcy liquidator of Terraform Labs, submitted a lawsuit to the Manhattan federal court. The world's most mysterious and profitable quantitative trading giant, Jane Street, was thrust into the spotlight.

The question that had been silent for four years finally had a new version of the answer.

Jane Street and the Secret Group Chat of LUNA

To understand the weight of this accusation, one must first know who the defendants are.

For most crypto users, Jane Street may be a strange name. But on Wall Street, it is indeed legendary, a company that deliberately maintains a low profile yet quietly becomes one of the most important players in the global financial market.

Between 1999 and 2000, Tim Reynolds, Robert Granieri, and Michael Jenkins, three former Susquehanna traders, along with IBM developer Marc Gerstein, founded Jane Street in a small windowless office in New York. In the beginning, they engaged in ADR arbitrage, which was unremarkable and received little attention. But they soon focused on a niche market of ETFs and made it their core battleground.

This bet changed everything.

Today, Jane Street is one of the largest market makers in the world, operating simultaneously in 45 countries and over 200 trading venues, controlling about 24% of the primary market for U.S.-listed ETFs, with a monthly equity trading volume reaching 20 trillion dollars. In 2024, the net trading income for the full year is 20.5 billion dollars, surpassing Bank of America and rivaling Goldman Sachs. In the second quarter of 2025, it set a single-quarter record of 10.1 billion dollars in net trading income and 6.9 billion dollars in net profit, breaking all major Wall Street investment banks’ quarterly records.

With 3,000 employees, no CEO, and no traditional hierarchy, all compensations are distributed based on overall company profits. Jane Street describes itself as "a collection of puzzlers," while outsiders call it an "anarcho-commune," flat, mysterious, and almost entirely closed off to the media.

One well-known character on its alumni list is SBF, who joined Jane Street after graduating from MIT in 2014, honing his trading instincts there for three years before leaving in 2017 to establish Alameda Research and FTX. The people trained by this company profoundly changed the landscape of the crypto world, in every sense of the term.

Now, this company, known for its "low-profile, precision, and always standing on the side of informational advantage," has taken the defendant's seat.

At the core of the accusation is a private group chat called "Bryce's Secret."

The founder is Bryce Pratt, an employee of Jane Street. He was previously an intern at Terraform and joined Jane Street after leaving, but his old connections were not severed, keeping the two doors open for him.

In February 2022, Pratt pulled his old colleagues into this private channel, establishing a communication pipeline connecting the inside of Terraform with Jane Street, with the other end linked to Terraform's software engineers and business development heads. The lawsuit alleges that it was through this pipeline that Jane Street learned in advance of Terraform's plan to quietly withdraw from the Curve liquidity pool, a decision not yet disclosed to the public.

On May 7, at 5:44 PM, just 10 minutes after Terraform Labs quietly withdrew 150 million dollars worth of UST from Curve’s 3pool, a wallet alleged to be associated with Jane Street followed suit, withdrawing 85 million dollars in UST, the largest single transaction in the pool’s history.

On May 9, UST had already fallen to 0.8 dollars, and signs of the crash were undeniable. At this time, Pratt messaged Do Kwon and the Terraform team through the group chat, suggesting that Jane Street could consider “purchasing Luna at a significant discount.”

While harvesting retail investors, they were also preparing to pick up bargains in the fire.

The defendants named in the lawsuit, in addition to Pratt, also include Jane Street co-founder Robert Granieri, the only one of the four founding members still in office, and employee Michael Huang. The lawsuit cites the Commodity Exchange Act and the Securities Exchange Act, while also presenting charges of fraud and unjust enrichment, seeking a jury trial, damages, and disgorgement of profits.

Bloomberg cites a key statement in the lawsuit: Jane Street's operations allowed it to "offset hundreds of millions of dollars in potential risk exposure at the right moment, just hours before the collapse of the Terraform ecosystem."

Jump Trading and Deeper Darkness

The lawsuit against Jane Street is not an isolated incident. Two months prior, the same liquidator Todd Snyder had already sued Jump Trading and its co-founder William DiSomma and former Jump Crypto president Kanav Kariya in federal court in Illinois, claiming 4 billion dollars.

Jump's story is, in some ways, more shocking than Jane Street's.

The lawsuit reveals a picture that had never been fully pieced together: as early as May 2021, when UST first faced a de-pegging crisis, Jump secretly bought about 20 million dollars of UST, pushing the price back to 1 dollar.

Later, the public came to believe the packaged story of the algorithmic stablecoin, the algorithm worked, and the system was self-healing. Terraform avoided regulatory scrutiny as a result, while Jump obtained over 61 million Luna tokens at a price of 0.40 dollars each, while the market price was about 90 dollars, a discount of over 99%. Jump later sold this batch of tokens, realizing an estimated profit of about 1.28 billion dollars.

During the final crash in May 2022, the Luna Foundation Guard transferred nearly 50,000 bitcoins (about 1.5 billion dollars) to Jump without written agreement, ostensibly for market protection. The ultimate whereabouts of the bitcoins remain unconfirmed, and the lawsuit states: "Whether Jump further profited from this remains unclear."

Notably, DiSomma and Kariya invoked the Fifth Amendment hundreds of times in previous SEC inquiries refusing to answer. Jump's subsidiary Tai Mo Shan settled with the SEC for 123 million dollars in 2024, admitting to "misleading investors." Kariya himself resigned as president of Jump Crypto that same year, citing an investigation by the CFTC.

Crucially, according to the statements in Jane Street's lawsuit, it was through Jump's information channels that Jane Street obtained some "non-public key information." The two cases are connected by an invisible thread.

But this story has another half.

Jane Street's response is quite direct: this is a "desperate lawsuit," a "transparent attempt to extract money from the company." They add that the losses of Terra and Luna investors stem from the "billion-dollar fraud" perpetrated by Do Kwon and Terraform's management, which will be strongly rebutted.

This statement is not wrong. Do Kwon has admitted to fraud and has been sentenced to 15 years in prison; Terraform also paid a fine of 4.47 billion dollars. The death spiral of Luna was determined by its design: algorithmic stablecoins are essentially systems that require continued buy support and confidence. Once panic is triggered, the arbitrage mechanism reverses, leading to self-destruction at an exponential rate.

But the truths “Do Kwon is guilty” and “others are innocent” do not stand together.

It is a fact that a building structure has fatal flaws. In the process of its collapse, whether anyone secretly cleared out the most valuable items before the firefighters arrived is a separate legal and moral question.

There is another detail worth noting. On the very day the Jane Street lawsuit was exposed, on-chain researcher ZachXBT announced that he would release "a major investigation into one of the most profitable institutions in the crypto industry, where multiple employees have long used internal data for insider trading" on February 26, 2026. He did not name names. But the timing made the entire crypto Twitter hold its breath in anticipation.

This story is not over. But one thing can already be confirmed: in the crypto market that boasts of "decentralization," true inequality has never disappeared; it has merely shifted from the trading desks of banks to the behind-the-scenes of smart contracts on the blockchain, continuing to exist in more covert forms.

The Luna incident may have been the most severe tear in that fissure, and those standing on the other side of the crack had safely evacuated long before the wall fell.

“The gentry gets back their money in full, while the common people share in the losses,” is true both in movies and in the crypto world.