Ten Minutes Before Luna's Crash, Market Maker Jane Street Exited Perfectly at the "Right Moment"

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

It was the most devastating crash in crypto history. UST, once hailed as the "crown jewel of algorithmic stablecoins," plummeted from $1 to worthless in a matter of days; Luna, with a market cap nearing $40 billion, crashed from its $116 peak to near zero.

Millions of ordinary investors lost their savings that early summer. They refreshed their screens, staring at the nosediving price chart, unsure of what was happening or what to do.

The official explanation came swiftly: a flawed algorithm design, Do Kwon's lies, a natural market death. Most accepted this answer, filing the catastrophe away as "another lesson for the crypto world," and moved on.

That answer held for nearly four years.

Until February 23, 2026, when Todd Snyder, the bankruptcy trustee for Terraform Labs, filed a lawsuit in Manhattan federal court. Jane Street, the world's most secretive and profitable quantitative trading giant, was thrust into the spotlight.

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

Jane Street and the Secret LUNA Group Chat

To understand the weight of these allegations, one must first know who the defendant is.

For most crypto users, Jane Street might be an unfamiliar name. But on Wall Street, it is a legend—a firm that deliberately maintains a low profile while quietly becoming one of the most important players in global financial markets.

Between 1999 and 2000, three former Susquehanna traders—Tim Reynolds, Robert Granieri, Michael Jenkins—alongside IBM developer Marc Gerstein, founded Jane Street in a windowless small office in New York. Starting with ADR arbitrage, their work was unremarkable and drew little attention. But they soon focused on a then-niche product—ETFs—and turned it into their core battleground.

That bet changed everything.

Today, Jane Street is one of the world's largest market makers, operating simultaneously in 45 countries across over 200 trading venues, controlling roughly 24% of the primary market for US-listed ETFs, with monthly equity trading volume reaching $2 trillion. Its full-year 2024 net trading revenue was $20.5 billion, surpassing Bank of America and rivaling Goldman Sachs. In Q2 2025, its single-quarter net trading revenue surged to a record $10.1 billion, with a net profit of $6.9 billion, shattering quarterly records for all major Wall Street investment banks.

With 3,000 employees, no CEO, no traditional hierarchy, and compensation based on the firm's overall profits, Jane Street describes itself as "a collection of puzzle solvers." The outside world calls it an "anarchist commune"—flat, mysterious, and almost entirely closed off to the media.

Its alumni list includes a familiar figure: SBF, who joined Jane Street after graduating from MIT in 2014, honed his trading intuition there for three years, then left in 2017 to found Alameda Research and FTX. The people trained by this firm have profoundly shaped the crypto world, for better or worse.

Now, this company, known for being "low-key, precise, and always on the side of information advantage," finds itself in the defendant's seat.

At the core of the allegations is a private group chat named "Bryce's Secret."

It was created by Jane Street employee Bryce Pratt. A former Terraform intern, Pratt joined Jane Street after leaving, but his old network remained intact—doors were open to him on both sides.

In February 2022, Pratt brought his former colleagues into this private channel, establishing an information pipeline connecting Terraform insiders with Jane Street. On the other end were Terraform software engineers and business development leads. The lawsuit alleges that through this pipeline, Jane Street learned in advance about Terraform's plan to quietly withdraw funds from a Curve liquidity pool—a decision not yet disclosed to the public.

At 5:44 PM on May 7, just 10 minutes after Terraform Labs quietly withdrew $150 million in UST from the Curve 3pool, a wallet allegedly linked to Jane Street followed suit, pulling out $85 million in UST—the single largest transaction in the pool's history.

By May 9, UST had fallen to $0.80, and signs of collapse were undeniable. At this point, Pratt messaged Do Kwon and the Terraform team via the group chat, suggesting Jane Street could consider "purchasing Luna at a significant discount."

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

Besides Pratt, other named defendants include Jane Street co-founder Robert Granieri—the only one of the four founders still active at the firm—and employee Michael Huang. The lawsuit cites the Commodity Exchange Act and the Securities Exchange Act, alleging fraud and unjust enrichment, demanding a jury trial, and seeking damages and disgorgement of profits.

Bloomberg, citing the lawsuit's core claim, stated: Jane Street's actions allowed it to "close out billions in potential exposure at precisely the right moment, just hours before the Terraform ecosystem collapsed."

Jump Trading and Deeper Darkness

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

In a sense, Jump's story is even more shocking than Jane Street's.

The complaint reveals a previously incomplete picture: as early as May 2021, during UST's first de-pegging crisis, Jump secretly intervened, buying approximately $20 million worth of UST to stabilize its price back to $1.

Later, the public believed the packaged story of an algorithmic stablecoin—the algorithm worked, the system was self-healing. Terraform evaded regulatory scrutiny as a result, and in exchange, Jump received over 61 million Luna tokens at $0.40 per token, while the market price was around $90—a discount exceeding 99%. Jump later sold these tokens, allegedly profiting around $1.28 billion, according to the lawsuit.

During the final collapse in May 2022, the Luna Foundation Guard transferred nearly 50,000 Bitcoin (worth approximately $1.5 billion) to Jump without a written agreement, ostensibly for market support. The ultimate destination of that Bitcoin remains unconfirmed to this day. The lawsuit notes: "It remains unclear whether Jump further enriched itself through this."

Notably, during prior SEC investigations, DiSomma and Kariya invoked the Fifth Amendment hundreds of times, refusing to answer questions. Jump's subsidiary, Tai Mo Shan, settled with the SEC for $123 million in 2024, admitting it "misled investors." Kariya himself resigned as Jump Crypto president the same year, citing a CFTC investigation.

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

But there's another half to this story.

Jane Street's response was direct: this is a "desperate lawsuit," a "transparent attempt to extract money from the company." They added that the losses of Terra and Luna investors stem from the "multibillion-dollar fraud" created by Do Kwon and Terraform management themselves, and they will vigorously defend against the claims.

This statement is not wrong. Do Kwon pleaded guilty to fraud and was sentenced to 15 years in prison; Terraform also paid a $4.47 billion fine. Luna's death spiral was inherent in its mechanism design: an algorithmic stablecoin is fundamentally a system requiring sustained buying pressure and confidence. Once panic triggers, the arbitrage mechanism works in reverse, leading to exponential self-destruction.

But "Do Kwon is guilty" and "others are innocent" are not mutually exclusive propositions.

A building having a fatal structural flaw is one fact. Whether someone, before the firefighters arrived, secretly emptied it of its most valuable items during its collapse is a separate legal and moral question.

Another detail is noteworthy. On the same day the Jane Street lawsuit was exposed, on-chain investigator ZachXBT announced he would release "a major investigation into one of crypto's most profitable institutions on February 26, 2026, revealing multiple employees engaged in long-term insider trading using internal data." He did not name names. But the timing's subtlety has the entire Crypto Twitter holding its breath in anticipation.

This story isn't over. But one thing is already clear: in this market that champions "decentralization," true asymmetry has never disappeared. It has merely shifted from bank trading desks to behind on-chain smart contracts, continuing to exist in more concealed forms.

The Luna event might have been the most violent tear along that fault line. And those standing on the other side had already evacuated safely long before the wall came crashing down.

"The gentry's money is returned in full, the commoners' money is split 70-30." As it is in the movies, so it is in the crypto world.