"The Second Truth" Behind the Luna Collapse: Jane Street's Escape Before Plunging into the Abyss

In May 2022, $40 billion vanished in just 72 hours.
It was the most devastating crash in cryptocurrency history. UST, once praised as “the jewel of algorithmic stablecoins,” plummeted from $1 to nearly worthless in a few days; Luna, with a market cap close to $40 billion, dropped from a high of $116 to almost zero.
Millions of ordinary investors lost all their savings that early summer. They kept refreshing their screens, staring at the continuously declining candlestick charts, clueless about what had happened or what to do next.
The official explanation was quickly provided: a bug in the algorithm, Do Kwon lied, and the market collapsed on its own. Most people accepted this answer, saw the disaster as “another lesson in the crypto world,” and moved on with their lives.
This explanation remained unchanged for nearly four years.
Until February 23, 2026, when Todd Snyder, the bankruptcy liquidation manager of Terraform Labs, filed a lawsuit in Manhattan federal court. Jane Street, the most profitable and mysterious quantitative trading giant in the world, suddenly became the focus of attention.
The question that had been silent for the past four years finally received a new answer.
The Secret Trading Group of Jane Street and LUNA
To understand the gravity of this accusation, we first need to know who the defendants are.
For most cryptocurrency users, Jane Street might be an unfamiliar name. But on Wall Street, it’s a legend—a company deliberately kept low profile but quietly became one of the most influential players in the global financial markets.
From 1999 to 2000, three former Susquehanna traders—Tim Reynolds, Robert Granieri, and Michael Jenkins—along with IBM software developer Marc Gerstein, founded Jane Street in a small, windowless office in New York.
Initially, they focused on trading ADR arbitrage, a discreet activity that drew little attention. However, they later shifted to a niche market—ETFs—and made it their main battleground.
That gamble changed everything.
Today, Jane Street is one of the largest market makers in the world, operating in 45 countries and over 200 exchanges. It controls about 24% of the primary market for listed ETFs in the U.S., with a monthly stock trading volume of $2 trillion.
In 2024, its net trading revenue reached $20.5 billion, surpassing Bank of America and rivaling Goldman Sachs. In Q2 2025, its quarterly net trading revenue hit a record $10.1 billion, with a net profit of $6.9 billion, breaking all major Wall Street investment bank quarterly records.
With 3,000 employees, no CEO, no traditional hierarchy, and all staff compensated based on overall profits, Jane Street describes itself as “a puzzle-solving collective,” while outsiders call it a “flat, secretive, almost hermetic community” with little media access.
Its list of former employees includes a notable figure: SBF, who joined Jane Street after graduating from MIT in 2014, honed his trading instincts there for three years, then left in 2017 to establish Alameda Research and FTX. Those trained by the firm have profoundly reshaped the crypto world—by any measure.
Today, this company, known for its “discreet, precise, and always information-advantaged style,” faces serious trouble.
The core of the allegations stems from a private chat group called “Bryce’s Secret.”
The founder, Bryce Pratt, a Jane Street employee, previously interned at Terraform. His old network remained intact, giving him access to both sides.
In February 2022, Pratt brought his former colleagues into this private communication channel, establishing an information pipeline connecting Terraform’s internal activities with Jane Street, with software engineers and Terraform’s head of business development on the other end. The lawsuit alleges that it was through this channel that Jane Street learned of Terraform’s secret plan to withdraw funds from the Curve liquidity pool—an undisclosed decision.
At 5:44 p.m. on May 7, just 10 minutes after Terraform Labs quietly withdrew $150 million in crypto (UST) from Curve’s 3pool, a wallet linked to Jane Street also withdrew $85 million in UST—this was the largest transaction in the fund’s history.
On May 9, the U.S. dollar dropped to $0.80, and signs of collapse became undeniable. At this point, Pratt sent a message to Do Kwon and the Terraform team via the group chat, suggesting that Jane Street might consider “buying Luna at a significant discount.”
While profiting from retail investors, they also seized the opportunity to salvage assets from the fire.
Besides Pratt, other defendants named in the lawsuit include Robert Granieri, co-founder of Jane Street and the only one among the four founders still working there, and employee Michael Huang.
The lawsuit cites the Commodity Exchange Act and Securities Exchange Act, alleging fraud and illicit enrichment, calling for a jury trial, damages, and disgorgement of all profits.
Bloomberg quotes a key statement from the lawsuit claiming that Jane Street’s actions allowed them to “hide hundreds of millions of dollars of potential risk right before the Terraform ecosystem collapsed.”
Trading Surge and Deeper Shadows
Jane Street’s lawsuit isn’t an isolated case. Two months earlier, the same liquidator, Todd Snyder, sued Jump Trading, co-founder William DiSomma, and former Jump Crypto president Kanav Kariya in Illinois federal court, seeking $4 billion in damages.
In some ways, the Jump story is even more shocking than Jane Street’s.
The lawsuit reveals a previously unseen picture: as early as May 2021, when UST first faced its de-pegging crisis, Jump secretly bought about $20 million worth of UST to stabilize its price back to $1.
Subsequently, the public believed in the fabricated story of effective algorithmic stablecoins capable of self-repair. Terraform exploited this to evade regulatory oversight, while Jump bought over 61 million Luna tokens at $0.40 each—compared to about $90 at the time—an over 99% discount. Jump then sold these tokens, allegedly earning about $1.28 billion in profit, according to the lawsuit.
During the final crash in May 2022, Luna’s defenders transferred nearly 50,000 Bitcoin (about $1.5 billion) to Jump without a written agreement, claiming it was to stabilize the market. The destination of these Bitcoin remains unknown, and the lawsuit states: “It is unclear whether Jump enriched itself through this transaction.”
Notably, DiSomma and Kariya invoked the Fifth Amendment hundreds of times to refuse answering questions in previous SEC investigations. Jump’s subsidiary, Tai Mo Shan, settled with the SEC for $123 million in 2024, admitting to “deceiving investors.” Kariya also resigned as president of Jump Crypto that same year, citing a CFTC investigation.
More importantly, according to the lawsuit, it was through Jump’s channels that Jane Street obtained some “material non-public information.” These two cases are linked by an invisible thread.
But the story is far from over.
Jane Street’s response was blunt: this is a “desperate lawsuit,” a “blatant scheme to siphon money from companies.” They added that the losses suffered by Terra and Luna investors stem from a “billions-of-dollars scam” orchestrated by Do Kwon and Terraform’s management, and they will fight back fiercely.
This statement is accurate. Do Kwon pleaded guilty to fraud and was sentenced to 15 years in prison; Terraform was fined $4.47 billion. Luna’s collapse was engineered by its very design: as an algorithmic stablecoin, it fundamentally relied on continuous buying and trust to maintain stability. When panic ensued, the arbitrage mechanism reversed, causing it to self-destruct exponentially.
However, the declarations that “Do Kwon is guilty” and “others are innocent” do not necessarily align.
The fact that the building had serious structural flaws leading to its collapse is undeniable. But whether someone secretly moved the most valuable items before firefighters arrived during the building’s fall is a separate legal and ethical issue.
Another notable detail is that on the same day the Jane Street lawsuit was revealed, blockchain researcher ZachXBT announced he would publish “a major investigation into one of the most profitable companies in the crypto industry, where many employees used insider data for long-term internal trading” on February 26, 2026. He did not specify the name. But this sensitive timing has left the entire crypto Twitter community holding its breath.
The story is far from over. But one thing is certain: in the crypto market, which prides itself on being “decentralized,” true inequality has never truly disappeared. It has simply shifted from bank trading floors to behind smart contracts on the chain, continuing in a more discreet form.
The Luna incident may be just the most severe crack in that fissure, while those on the other side have long evacuated before the walls came down.
“The rich get their full money back, while ordinary people only get a 30/70 split”—this is true in movies, and it’s also true in the crypto world.