The collapse of TerraUSD in May 2022 was one of crypto’s most spectacular disasters, wiping out roughly $40 billion in value. Now, bankruptcy court filings allege that one of Wall Street’s most sophisticated trading firms saw it coming, and not by accident.
Jane Street, the quantitative trading powerhouse, allegedly sold approximately $193 million worth of UST on May 7, 2022, just before the stablecoin lost its dollar peg and spiraled toward zero. The firm then reportedly profited around $134 million by shorting the token as the broader Terra ecosystem imploded. The allegations stem from filings in the Terraform Labs bankruptcy case.
The Telegram trail
At the center of the allegations is a private Telegram group reportedly called “Bryce’s Secret.” The group is linked to a former Terraform Labs intern and allegedly served as a communication channel between Jane Street and Terraform insiders.
On May 7, 2022, Terraform Labs withdrew $150 million in UST. Shortly after, Jane Street reportedly withdrew $85 million in UST. The proximity of those two withdrawals, combined with the alleged Telegram connection, forms the backbone of the insider trading claim.
