Jane Street's Allegations Continue to Escalate: After Lawsuit, Bitcoin's "10-Point Dump" Disappears

On February 26, according to WSJ reports, on February 24, the bankruptcy trustee appointed by Terraform Labs filed a lawsuit in the U.S. Federal Court in New York against Jane Street, accusing it of front-running trades and profiting during the Terra collapse by using non-public insider information provided by Terra insiders. The complaint shows that Jane Street established a secret communication channel with Terraform Labs internal employees through former intern Bryce Pratt to obtain confidential non-public information. On May 7, 2022, Terraform Labs withdrew 150 million TerraUSD (UST) from the Curve liquidity pool without prior disclosure of its intentions. Less than 10 minutes later, Jane Street followed suit through related wallets, withdrawing about 85 million UST, completing a front-running trade before the market-wide panic and UST’s full de-pegging, which not only illegally profited but also accelerated the collapse of Terraform Labs and the Terra ecosystem. A spokesperson for Jane Street responded to the allegations from the Terraform Labs bankruptcy trustee, stating that the lawsuit is an attempt to extract money from Jane Street. Jane Street will firmly defend its rights and oppose the “baseless, opportunistic accusations.”

In addition to the Terraform lawsuit, last year Jane Street was accused of market manipulation by Indian authorities, with assets worth approximately 4.843 billion rupees (about $565 million) frozen, and trading bans imposed in the Indian securities market. There are also rumors that Chinese regulators are reviewing Jane Street’s trading patterns in the Chinese ETF market. The crypto community notes that since Jane Street was sued, Bitcoin’s daily “10 AM dump” (Eastern Time) suddenly disappeared, Bitcoin rose 10%, increasing its market cap by about $120 billion, and BTC’s weekly chart turned green for the first time after five consecutive red candles. During the same period, the overall cryptocurrency market cap also increased by nearly $200 billion. Bloomberg ETF analyst Eric Balchunas said, “This ‘threat’ is gone, and that’s the atmosphere we feel today in CT and price movements. I also understand that the previous sharp intraday declines nearly destroyed every rebound and shook everyone’s confidence. But just eliminating it—will that be enough to sustain a continued rebound? We’ll see.”

Market speculation around Jane Street has reignited discussions about the spot Bitcoin ETF trading mechanism. Analysts point out that spot ETF shares can be redeemed and issued by authorized participants (APs) under regulatory exemptions, and do not necessarily require immediate buying or selling of Bitcoin on the open market. In cases of futures contango, APs may also hedge and offset through futures and other derivatives, leading to a time lag between ETF capital inflows, spot buying, and short-term price movements. As a leading global quantitative trading firm, Jane Street has a broad presence in the crypto space, mainly focusing on infrastructure, DeFi, and crypto mining. Public information shows that Jane Street has invested in native crypto projects including ZetaChain, Arbitrum, 1inch, Euler Finance, Membrane Labs, Kaito, Vest Exchange, and others.

In terms of equity, Jane Street significantly increased its holdings in several crypto mining companies through the secondary market between 2024 and 2026, including approximately 5.4% of Bitfarms (BITF), about 5% of Cipher Mining (CIFR), and around 5% of Hut 8 (HUT). Additionally, Jane Street participated in multiple rounds of CEX financing last year. It is also one of the main liquidity providers and stockholders for CEX.