Written by: Universe Wave Naruto, Deep Tide TechFlow
Original Title: The Truth Behind LUNA's Collapse? Someone Predicted the Evaporation of 40 Billion Dollars 10 Minutes Early
In May 2022, 40 billion dollars evaporated within 72 hours.
It was the most devastating collapse in crypto history. UST, once hailed as the "crown jewel of algorithmic stablecoins," plummeted from 1 dollar to worthless in just a few days; Luna, once with a market cap nearing 40 billion dollars, fell from its high of 116 dollars to nearly zero.
Millions of ordinary investors lost their savings that early summer. They refreshed their screens, watching the continuously plunging K-line, unsure of what had happened or what to do.
The official explanation came quickly: flaws in the algorithmic design, Do Kwon lied, a natural market death. Most people accepted this answer, relegating that catastrophe to "another lesson in the crypto world," and moved on.
This answer held for nearly four years.
Until February 23, 2026, when Todd Snyder, the bankruptcy liquidator for Terraform Labs, filed a lawsuit in the Manhattan Federal Court. Jane Street, the world's most secretive and profitable quantitative trading giant, was thrust into the spotlight.
That question, silent for four years, finally has a new version of the answer.
Jane Street and LUNA's Secret Group Chat
To understand the weight of this accusation, one must first know who the defendant is.
To most crypto users, Jane Street might be an unfamiliar name. But on Wall Street, it is legendary—a firm that deliberately maintains a low profile yet quietly became one of the most important players in the global financial market.
Between 1999 and 2000, Tim Reynolds, Robert Granieri, Michael Jenkins—three former Susquehanna traders—alongside IBM developer Marc Gerstein, founded Jane Street in a windowless small office in New York. Starting out, they did ADR arbitrage, inconspicuous and unnoticed. But they soon set their sights on a then-niche market product: ETFs, and made it their core battleground.
This bet changed everything.
Today's Jane Street is one of the world's largest market makers, operating simultaneously in 45 countries and over 200 trading venues, holding about 24% of the primary market share for US-listed ETFs, with monthly equity trading volume reaching 2 trillion dollars. In 2024, its annual net trading revenue was 20.5 billion dollars, already on par with Bank of America and Goldman Sachs. In Q2 2025, its single-quarter net trading revenue刷新 (refreshed) to 10.1 billion dollars, with a net profit of 6.9 billion dollars, breaking the quarterly records of all major Wall Street investment banks.
3000 employees, no CEO, no traditional hierarchy, all employees compensated based on the company's overall profits. Jane Street describes itself as a "collection of puzzle solvers," while the outside world calls it an "anarchist commune"—flat, mysterious, and almost completely closed off to the media.
Its alumni list includes a familiar name: SBF (Sam Bankman-Fried) joined Jane Street in 2014 after graduating from MIT, honing his trading intuition here for three years before leaving in 2017 to establish Alameda Research and FTX. The people nurtured by this company have profoundly changed the face of the crypto world, in whatever sense.
Now, this company, known for being "low-key, precise, always on the side of information advantage," sits in the defendant's seat.
And the core of the accusation comes from a private group chat called "Bryce's Secret."
It was created by Jane Street employee Bryce Pratt. He was once an intern at Terraform, left and joined Jane Street, but his old network remained intact—both doors were open to him.
In February 2022, Pratt brought his old colleagues into this private channel, establishing an information pipeline connecting Terraform's interior with Jane Street, with the other end linked to Terraform's software engineers and business development heads. The complaint alleges that it was through this pipeline that Jane Street learned in advance about Terraform's plan to quietly withdraw funds from the Curve liquidity pool—a decision not yet announced to the public.
At 5:44 PM on May 7, 10 minutes after Terraform Labs quietly withdrew 150 million dollars in UST from the Curve 3pool, a wallet allegedly associated with Jane Street followed by pulling out 85 million dollars in UST, the largest single transaction in the pool's history.
By May 9, UST had fallen to 0.8 dollars, 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.
The defendants named in this case, besides Pratt, include Jane Street co-founder Robert Granieri—the only one of the four founders still active—and employee Michael Huang. The lawsuit cites the Commodity Exchange Act and the Securities Exchange Act, simultaneously raising charges of fraud and unjust enrichment, demanding a jury trial, and seeking compensation and disgorgement of profits.
Bloomberg, citing the core statement in the complaint, reported: Jane Street's operations allowed it to "close billions of dollars in potential risk exposure at the right moment, just hours before the collapse of the Terraform ecosystem."
Jump Trading and Deeper Darkness
The Jane Street lawsuit is not an isolated incident. Two months prior, the same liquidator, Todd Snyder, had already sued Jump Trading and its co-founder William DiSomma, along with former Jump Crypto president Kanav Kariya, in an Illinois federal court, seeking 4 billion dollars in damages.
Jump's story is, in a sense, even more shocking than Jane Street's.
The complaint reveals a picture never fully pieced together before: as early as May 2021, during UST's first de-pegging crisis, Jump secretly intervened, buying approximately 20 million dollars worth of UST to stabilize the price back to 1 dollar.
Later, the public believed the packaged algorithmic stablecoin story—the algorithm worked, the system was self-healing. Terraform借此 (took advantage of this) evade regulatory scrutiny, and Jump, in exchange, received over 61 million Luna tokens at a price of 0.40 dollars per token, when the market price was around 90 dollars—a discount of over 99%. Jump later sold these tokens, with the complaint estimating profits of around 1.28 billion dollars.
During the final collapse in May 2022, Luna Foundation Guard transferred nearly 50,000 bitcoins (approx. 1.5 billion dollars) to Jump without a written agreement, nominally for market support. The final whereabouts of these bitcoins remain unconfirmed to this day. The complaint states: "It is unclear whether Jump further enriched itself through this."
Notably: DiSomma and Kariya, during previous SEC investigative inquiries, invoked the Fifth Amendment hundreds of times to refuse to answer. Jump's subsidiary Tai Mo Shan settled with the SEC in 2024 for 123 million dollars, admitting it "misled investors." Kariya himself resigned as president of Jump Crypto the same year, citing the CFTC investigation.
More crucially, according to the Jane Street complaint, it was through Jump's information channels that Jane Street obtained some "non-public key 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 "multi-billion dollar fraud" created by Do Kwon and Terraform management themselves, and they will vigorously fight back.
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 dollar fine. Luna's death spiral was destined from the mechanism's design: algorithmic stablecoins are, in essence, a system that requires continuous buy-side support and confidence maintenance. Once panic triggers, the arbitrage mechanism operates in reverse, destroying itself at an exponential rate.
But "Do Kwon is guilty" and "others are innocent" are not mutually exclusive propositions.
A building has a fatal structural flaw—that is a fact. During its collapse, whether someone took the opportunity to empty it of its most valuable items before the firefighters arrived is a separate legal and ethical question.
Another detail is worth noting. On the same day the Jane Street lawsuit was exposed, on-chain tracking researcher ZachXBT announced he would release "a major investigation into one of the crypto industry's most profitable institutions on February 26, 2026, regarding multiple employees long using internal data for insider trading." He did not name names. But the微妙 (subtle) timing made the entire crypto Twitter hold its breath in anticipation.
This story isn't over yet. But one thing is already certain: in this market that touts "decentralization," true asymmetry never disappeared; it just moved from bank trading desks to behind on-chain smart contracts, continuing to exist in a more隐蔽 (hidden) form.
The Luna incident might just be the most violent tear in that crack, and those standing on the other side of the crack had already evacuated safely long before the wall collapsed.
"The gentry's money is returned intact, the common people's money is split thirty-seventy," as in the movie, so it is in the crypto world.
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