The harvesting tactics of the quantitative giant Jane Street

Original author: Bull Theory

Translation: Ken, Chaincatcher

Based on the number of charges faced, Jane Street’s entire business model seems to be about artificially creating market crashes to extract liquidity and profit from it.

This isn’t a one-time occurrence but has happened multiple times.

The case of the Indian stock market is the clearest example of Jane Street’s modus operandi. They ran an algorithm similar to “crashing at 10 a.m.” in India, making $4.23 billion in profit, but were eventually exposed and temporarily banned by the Securities and Exchange Board of India (SEBI).

Their operation works as follows:

Indian Script

From January 2023 to March 2025, Jane Street’s Indian entity generated approximately 365.02 billion rupees in net profit. On 21 designated expiry dates, SEBI identified 48.4357 billion rupees suspected of being illegal proceeds. SEBI issued a 105-page temporary order and subsequently imposed trading bans. The involved funds have been deposited into a third-party escrow account. Appeals are still ongoing.

The important part isn’t the ban itself but the underlying mechanism.

Jane Street’s operational structure is as follows:

1. Jane Street Singapore Pte Ltd (FPI)
2. Jane Street Asia Trading Ltd (FPI, Hong Kong)
3. JSI Investments Pvt Ltd (India subsidiary)
4. JSI2 Investments Pvt Ltd (India subsidiary)

This separation of entities allows the apparent trading side and the actual profit-generating side to be attributed to different corporate entities.

How does expiry date manipulation work?

Index options settle based on the final value of the index on the expiry date. Even tiny fluctuations on that day can generate huge profits from options.

SEBI describes the strategy as follows:

Morning phase (around 9:15 a.m. to later in the morning):

• The Indian entity actively buys Bank Nifty (bank index) components and futures.
• It places large orders.
• On certain days, their trading volume accounts for a significant portion of the total market volume.
• Buying heavy-weight stocks pushes up the index. Meanwhile, offshore entities establish large short positions in options.
• Selling call options.
• Buying put options.
• Net exposure is heavily bearish.

From the delta values, the size of the options positions is several times that of the stock positions. This indicates that buying stocks isn’t the main bet but a setup step.

Afternoon phase (later in the morning until close):

After building the options book, the Indian entity reverses its trading direction, starting to sell large amounts of the same stocks and futures.

The selling pressure causes the index to fall. If the closing price approaches certain strike prices, call options become worthless, and put options increase significantly in value.

The spot stocks incur slight losses, but the options positions profit substantially.

SEBI’s example:

• Morning buy-in amounts reach 437 billion rupees.
• The delta exposure of options expands significantly. Cash/futures loss of 6.16 billion rupees.
• Options profit of 73.493 billion rupees.

Net profit for the day: 67.333 billion rupees.

The activity in the spot market influences the settlement points, while the derivatives book captures the real profits. This is India’s typical trick: using the underlying asset’s capital advantage to manipulate derivative returns.

2) The 10 a.m. manipulation script

Now, let’s look at Bitcoin.

For months, there has been repeated selling pressure around 10 a.m. Eastern Time. This time window is crucial:

• U.S. stock markets open.
• Liquidity increases.
• Large orders can be executed efficiently.
• Derivatives markets become active.

Observed pattern:

Prices suddenly drop. Leveraged long positions are liquidated, triggering a chain of forced selling. Afterwards, prices stabilize.

The crypto market has extremely high leverage. A 2-3% drop can wipe out a large portion of long positions.

When liquidation engines activate:

• Exchanges automatically sell collateral.
• Market orders flood the order book.
• Prices further decline.
• More liquidations are triggered.

If a large trading firm actively sells during this window, it can initiate the first wave of decline. The liquidation mechanism amplifies this trend. The chain reaction completes the harvest. After forced selling clears, prices often rebound. This structure is very similar to the Indian case: in India, index manipulation aims to influence options returns; in crypto, spot price swings impact derivatives liquidation and futures positions.

The underlying asset’s movement acts as a trigger, but the real profit engine is the derivatives side.

Another key detail: after the lawsuit against Terraform on February 23, 2026, this 10 a.m. pattern disappeared.

Bitcoin not only avoided selling but rebounded. It was the shorts that got liquidated, not the longs. When a mechanical pattern like this suddenly vanishes under regulatory pressure, market participants naturally pay close attention.

3) From Bitcoin’s perspective, was the Luna collapse used to force BTC prices down?

In May 2022, Terra’s UST stablecoin collapsed from a $40 billion ecosystem to zero within days. The peg mechanism broke, panic spread, and Bitcoin reserves used to defend the system were forced into action under extreme pressure.

Besides the de-pegging event itself, the lawsuit suggests another structural possibility.

Terraform Labs used Bitcoin reserves to maintain UST’s peg. If UST becomes unstable, these reserves must be immediately deployed.

This means in emergencies, Bitcoin must be sold or collateralized.

Such emergencies completely strip away bargaining power.

Lawsuit allegations:

• Jane Street knew that Curve’s liquidity pool was exhausted.
• Under extremely thin liquidity, they executed a $850 million UST sell-off.
• The peg rapidly collapsed.
• During the crisis, Jane Street maintained direct contact with Do Kwon.
• Reports suggest discussions included buying Bitcoin at very low discounts, totaling between $200 million and $500 million.

If Terraform was forced to defend the peg, it had to quickly mobilize Bitcoin reserves. If someone knew this pressure was imminent, they could accelerate the shorting of UST, pushing the moment of collapse forward.

Applying greater pressure on the peg:

• Accelerates reserve deployment.
• Weakens the other side’s bargaining position.
• Allows buying BTC at a discount.

The simple hypothesis: Was this collapse just a normal trading event, or was it leveraged to plunder Bitcoin reserves at extremely low prices?

These are allegations in ongoing lawsuits, but the sequence of events clearly reveals underlying motives.

For a full analysis of the Terra incident, we’ve published a detailed tweet.

4) Next, about ETFs

Jane Street has become an authorized participant for several major Bitcoin ETFs. Authorized participants are central to ETF creation and redemption mechanisms.

They can:

• Create ETF shares.
• Redeem ETF shares.
• Hedge via futures.
• Sell options.
• Engage in spread arbitrage.

Public 13F filings only show ETF long positions. But they don’t reveal: futures shorts, swaps, sold options, or net hedge positions. The disclosed long positions are not equivalent to net long exposure.

It could be:

• Long ETF stocks, short CME futures, short options, paired trading.

What the public sees is only the surface trading, while the full derivatives book remains hidden. Combining this with the recurring pattern of spot selling, the surface data can’t reveal the full strategy.

In India, stock trading is transparent, and options exposure is the real profit driver. In ETFs, stock holdings are transparent, but derivatives positions may not be. The structural similarity lies in the opacity between visible trading and concealed positions.

5) Most importantly, their trading algorithms are classified as confidential

The Millennium Lawsuit — the sealed $1 billion strategy. The Millennium lawsuit is not just a side note; it hits at the core of the entire architecture.

In early 2024, two senior traders left Jane Street:

• Doug Schadewald — veteran index options trader
• Daniel Spottiswood — his direct subordinate

They joined Millennium Management. Soon after, Jane Street sued Millennium in Manhattan federal court, accusing it of stealing a highly valuable proprietary trading strategy.

During the trial, a key detail was revealed: the strategy focused on Indian index options and generated about $1 billion in profit in just 2023.

This number changed everything. It was no longer a small arbitrage but a super-profitable engine.

What did this lawsuit reveal?

It clarified three points:

• The strategy is options-driven.
• It operates in the Indian index derivatives market.
• It is highly profitable and repeatable.

But almost everything about how it works remains hidden from the public. Large portions of court documents are redacted. The public cannot see:

• The algorithm generating signals.
• The timing models.
• Strike price selection frameworks.
• Delta exposure management.
• Cross-entity coordination processes.
• Risk control systems.

The only visible figure is profit. The engine itself remains concealed.

Defense argument:

Millennium claims that the Indian options market structure is public information, and the strategy isn’t secret.

The departing traders say the system is based on experience and expertise, not hidden automation models. This raises a key disagreement:

If the advantage is purely structural, anyone can replicate it.

If the advantage lies in execution — timing, coordination, position sizing, layered derivatives layout — then the system itself is the core asset. The execution system can be redeployed.

Why did this lawsuit trigger regulatory scrutiny?

It unexpectedly disclosed that a single trading strategy could earn about $1 billion annually in India.

This exposure sparked media coverage, which led to regulatory investigation. The investigation ultimately resulted in SEBI’s temporary order describing an expiry date manipulation scheme:

• Spot trading influences index movements.
• Large options books extract hefty returns.

The exposure of this $1 billion strategy made an investigation unavoidable. The case settled in December 2024. Terms are undisclosed. No full trial was held, and no detailed blueprint was published.

Its core operation remains sealed.

Why are the redacted contents so important?

The significance of these hidden parts lies in their structure. A $1 billion options strategy:

• Operates across multiple entities.
• Relies on layered derivatives layout.
• Is fiercely defended in federal court.
• Its internal workings are erased from public view.

Yet, the same company later faced SEBI charges of expiry date manipulation, was involved in Terra-related lawsuits, served as a key authorized participant for major Bitcoin ETFs, and holds massive ETF positions without publicly revealing derivatives hedging.

Its internal trading systems (execution layer) are invisible in public documents. Public reports only show positions.

They do not show execution logic. Court documents only show allegations. They do not reveal algorithm code. Regulatory orders only show results. They do not disclose proprietary models.

When a company’s most profitable system is classified as top secret, and similar structural patterns repeatedly appear in other markets, strict scrutiny is inevitable.

If a company can:

• Use vast capital to manipulate underlying markets.
• Layer even larger derivatives exposure.
• Control settlement influence.
• Coordinate across entities.
• Deeply understand ETF underlying mechanisms.
• Keep execution systems highly confidential.

then surface data can never reflect the full picture.

A company at the center of every market manipulation vortex?

Sam Bankman-Fried (SBF) worked at Jane Street for about three years before founding Alameda Research and later FTX. In April 2021, FTX invested $500 million in Anthropic, acquiring about 8% stake.

In May 2022, Terra and UST collapsed. Reports say Alameda was heavily impacted during that broad crypto market crash. FTX subsequently declared bankruptcy.

During the bankruptcy proceedings in 2023–2024, its holdings in Anthropic were sold at an estimated valuation close to $18 billion.

Jane Street was the second-largest buyer in that round, investing about $100 million. The money flow cycle was:

• A former Jane Street trader founded FTX.
• FTX invested early in Anthropic.
• FTX collapsed.
• Anthropic shares were liquidated.
• Jane Street bought part of them, now worth $2.1 billion.

In 2024, Trump Media & Technology Group officially sent a letter to NASDAQ, accusing potential naked short selling and naming Jane Street as one of the major trading firms responsible for its stock’s plunge. No formal charges followed, but the firm was publicly named in the dispute.

Additional events include:

• SEBI’s temporary ban in India, accusing manipulation of expiry index, seizing about $570 million.
• The Millennium lawsuit exposing a sealed Indian options strategy earning about $1 billion annually.
• Ongoing Terra lawsuit alleging insider trading related to UST collapse.
• Jane Street as a core authorized participant for major Bitcoin ETFs.
• Its position as one of IBIT’s largest buyers.

Across stocks, derivatives, crypto, ETFs, and private AI equity rounds, the same company repeatedly appears in:

Market manipulation. Liquidity crises. Regulatory scrutiny. Capital sell-offs.

None of these independent events can definitively prove coordinated criminal activity.

But the unsettling reality is:

Whenever there’s a major market crash or turbulence, Jane Street is often involved.

Is this just a coincidence because it’s one of the world’s largest quant firms, operating across all major asset classes?

Or is there a deeper structural issue — that this company’s market positioning inherently allows it to profit massively from manipulation or crises?