Do you remember the Terraform collapse in 2022 that shook the entire crypto market? Recently, another major detail has come to light—high-frequency trading firm Jane Street is accused of insider trading, and this time, the trading may have directly accelerated Terra's demise.

Todd Snyder, the bankruptcy trustee of Terraform Labs, recently filed a lawsuit against Jane Street, accusing this trading giant of using insider information to front-run trades. What exactly happened? On May 7th, Terraform quietly withdrew 150 million UST from Curve3pool. The question is—Jane Street-related wallets also withdrew 85 million UST from the same pool within 10 minutes. The timing was too coincidental, almost immediately triggering market panic.

Why is this considered insider trading? Because Snyder believes Jane Street had access to non-public market information, using that advantage to act before the public and profit from it. This move directly caused UST to lose its 1:1 peg to the dollar, and Luna subsequently collapsed to zero. The entire process took less than a week, with a $40 billion market cap evaporating.

Even more interesting, on May 9th, UST started to decline. Jane Street employee Bryce Pratt sent a message to the Do Kwon team saying he wanted to buy Bitcoin or Luna. Kwon’s response implied that Jump’s co-founder should have notified them earlier about the funding. Snyder submitted these details as evidence of insider trading.

Of course, Jane Street denies the allegations. They say it’s a "desperate" and "baseless" lawsuit meant to extort money from them. They also emphasize that the losses suffered by Terra and Luna holders were due to fraud by Terraform’s management, not their trading activities.

This case actually reflects a bigger issue: even in transparent DeFi systems, information asymmetry still exists. As a market participant, is Jane Street trading normally or truly exploiting insider advantages? This will be a difficult legal question to define. But from a market perspective, if these allegations are true, it indeed shows that even on the blockchain, big players can find ways to gain informational advantages.