In the crypto crash that evaporated $40 billion, someone knew the ending 10 minutes in advance.

The inside story is gradually surfacing.

Written by: Uchu Bō Mí Rén, Deep Tide TechFlow

In May 2022, $40 billion evaporated in 72 hours.

It was the most catastrophic crash in crypto history. Once hailed as the “crown of algorithmic stablecoins,” UST plummeted from $1 to worthless paper within days; Luna, with a market cap close to $40 billion, fell from a high of $116 to nearly zero.

Millions of ordinary investors lost their savings that early summer. They kept refreshing their screens, watching the constantly falling candlestick charts, clueless about what was happening or what to do.

Official explanations came quickly: flawed algorithm design, Do Kwon lied, and the market naturally died. Most accepted this answer, attributing the disaster to “another lesson in the crypto world,” then moved on.

This explanation held for nearly four years.

Until February 23, 2026, when Todd Snyder, the bankruptcy trustee of Terraform Labs, filed a lawsuit in Manhattan Federal Court. The world’s most mysterious and profitable quant trading giant, Jane Street, was thrust into the spotlight.

The long-silent question finally had a new version of the answer.

Jane Street and LUNA’s Secret Group Chat

To understand the weight of these charges, first know who the defendants are.

For most crypto users, Jane Street might be an unfamiliar name. But on Wall Street, it’s legendary—a deliberately low-profile firm that quietly became one of the most important players in global financial markets.

Between 1999 and 2000, former Susquehanna traders Tim Reynolds, Robert Granieri, and Michael Jenkins, along with IBM developer Marc Gerstein, founded Jane Street in a windowless office in New York. Their start was in ADR arbitrage—unremarkable and unnoticed. But they soon set their sights on a niche market: ETFs, and made it their core battleground.

That bet changed everything.

Today, Jane Street is one of the world’s largest market makers, operating in 45 countries and over 200 trading venues, controlling about 24% of the U.S. listed ETF primary market, with monthly equity trading volume reaching $2 trillion. In 2024, its net trading revenue hit $20.5 billion, surpassing U.S. banks and rivaling Goldman Sachs. In Q2 2025, it posted a record quarterly net trading revenue of $10.1 billion and a net profit of $6.9 billion, breaking all major Wall Street investment bank records.

With 3,000 employees, no CEO, no traditional hierarchy—compensation is distributed based on overall company profits. Jane Street describes itself as “a collective of puzzle solvers,” while outsiders call it an “anarchist commune”: flat, mysterious, almost completely closed off to the media.

Among its alumni is a well-known figure: SBF, who graduated from MIT in 2014, joined Jane Street, honing his trading instincts for three years before leaving in 2017 to establish Alameda Research and FTX. The people this company cultivated profoundly changed the crypto landscape—however you interpret that change.

Now, this company, known for being “low-key, precise, and always on the side of information advantage,” sits in the defendant’s dock.

The core of the charges comes from a private group chat called “Bryce’s Secret.”

The creator is Jane Street employee Bryce Pratt. He was once an intern at Terraform, then joined Jane Street, maintaining old connections on both sides.

In February 2022, Pratt brought his former colleagues into this private channel, establishing an information pipeline between Terraform and Jane Street. On one end were Terraform’s software engineers and business development leaders. The lawsuit alleges that through this pipeline, Jane Street gained early knowledge of Terraform’s secret plan to withdraw liquidity from Curve, a decision not yet announced publicly.

At 5:44 p.m. on May 7, shortly after Terraform Labs quietly withdrew $150 million of UST from Curve’s 3pool, a wallet linked to Jane Street withdrew $85 million of UST—the largest single transaction in that pool’s history.

By May 9, UST had fallen to $0.80, and the signs of collapse were undeniable. At this point, Pratt messaged Do Kwon and the Terraform team in the group chat, suggesting that Jane Street could consider “buying Luna at a steep discount.”

While profiting from retail investors, they also prepared to pick up the pieces amid the chaos.

The defendants named include Pratt, along with Jane Street co-founder Robert Granieri, and current employee Michael Huang, the only remaining among the four founders. The lawsuit cites the Commodity Exchange Act and Securities Exchange Act, accusing them of fraud and unjust enrichment, requesting a jury trial, damages, and disgorgement of profits.

Bloomberg quoted the core statement from the lawsuit: Jane Street’s actions allowed it to “hedge billions of dollars of potential risk exposure at the right time, just hours before the Terraform ecosystem collapsed.”

Jump Trading and Deeper Darkness

Jane Street’s lawsuit is not an isolated incident. Two months earlier, the same trustee, Todd Snyder, sued Jump Trading and its co-founders William DiSomma and former Jump Crypto president Kanav Kariya in Illinois federal court, claiming $4 billion.

The story of Jump is arguably even more shocking than Jane Street’s.

The lawsuit reveals a previously unseen picture: as early as May 2021, when UST first faced de-pegging, Jump secretly bought about $20 million worth of UST, stabilizing its price back to $1.

Later, the public believed the narrative of an effective algorithmic stablecoin, and the system was self-healing. Terraform avoided regulatory scrutiny, while Jump acquired over 61 million Luna tokens at $0.40 each—market price then around $90—at a discount of over 99%. Jump later sold these tokens, reportedly earning about $1.28 billion.

During the final collapse in May 2022, Luna Foundation Guard transferred nearly 50,000 Bitcoin (about $1.5 billion) to Jump without a written agreement, ostensibly for market support. The ultimate destination of these Bitcoins remains unknown. The lawsuit states: “It’s unclear whether Jump further enriched itself through this.”

Notably, DiSomma and Kariya repeatedly invoked the Fifth Amendment during SEC investigations, refusing to answer hundreds of questions. Jump’s subsidiary Tai Mo Shan settled with the SEC in 2024 for $123 million, admitting to “misleading investors.” Kariya resigned as Jump Crypto president the same year, citing CFTC investigations.

More critically, according to the Jane Street lawsuit, Jump’s information channels allowed Jane Street to access some “non-public critical information.” These two cases are connected by an invisible line.

But there’s another side to this story.

Jane Street’s response is straightforward: this is “a desperate lawsuit,” an “open attempt to extract money from the company.” They further state that the losses of Terra and Luna investors stem from Do Kwon and Terraform’s own creation of “billions of dollars in fraud,” which they will vigorously counter.

They are not wrong. Do Kwon admitted to fraud and was sentenced to 15 years in prison; Terraform paid a $4.47 billion fine. The Luna death spiral was doomed from the start: as an algorithmic stablecoin, it fundamentally requires continuous buying and confidence. Once panic triggers, the arbitrage mechanisms work in reverse, destroying the system exponentially.

But “Do Kwon is guilty” and “others are innocent” are not mutually exclusive.

A building with a fatal structural flaw is a fact. During its collapse, whether someone secretly looted the most valuable assets before firefighters arrived is a separate legal and moral issue.

Another detail worth noting: on the same day Jane Street’s lawsuit was revealed, on-chain researcher ZachXBT announced he would publish “a major investigation into one of the most profitable institutions in crypto, revealing long-term insider trading by multiple employees.” He did not name names. But the timing has everyone on crypto Twitter holding their breath.

The story isn’t over yet. But one thing is certain: in the crypto market that claims to be “decentralized,” true inequality has never disappeared. It has only shifted from bank trading desks to behind smart contracts on the chain, in a more covert form.

The Luna incident may be just the most intense tear in that fissure, and those on the other side of the crack had already evacuated safely before the wall fell.

“Rich people’s money is returned in full, while the common people’s share is split three-seven,” as in the movies—and so it is in the crypto world.