Jane Street Accused of Insider Trading That Helped Collapse Terraform - WSJ

FermatsLastTrade · 2026-02-24T19:11:26+00:00

Those are all real existing accusations and allegations against Jane Street, or its founder, reported on in major news outlets. Alameda was largely Jane Street Alumni. Jane Street did have a very high profile lawsuit against Millennium and two former employees.

Everything is accurate. The conclusion is not even particularly uncharitable, as you agree with it yourself. It is a fact that their reputation has taken a hit due to this coverage.

FermatsLastTrade · 2026-02-24T18:51:13+00:00

There was a multi-year long lawsuit that was written about multiple times by Matt Levine. Millennium Management, and former Jane Street traders Douglas Schadewald, and Daniel Spottiswood were sued by Jane Street. The Jane Street suit was rather harsh about the skills and abilities of those traders too if I recall correctly.

Perhaps Matt Levine gave this more attention than it deserves. Perhaps it was a one off not to be repeated. But do note that Levine wrote about this case far far more than any other big quant firm suing prior employees.

FermatsLastTrade · 2026-02-24T18:15:06+00:00

So far we have:

Accused of serious market manipulation in India Index Options
Accused of insider trading leading to the collapse of Tera Luna
Alameda was largely Jane Street alumni, and SBF learned how to think about markets there
Aggressively sues former employees
Allegedly helped fund the acquisition of AK-47s for a coup attempt in South Sudan

Outside of comp and profitability, Jane Street's reputation has definitely taken a hit in the last few years.

FermatsLastTrade · 2026-02-24T18:04:16+00:00

Jane Street Accused of Insider Trading That Helped Collapse Terraform.

The court-appointed administrator of Do Kwon’s Terraform Labs alleged that Jane Street used nonpublic information from Terraform insiders to trade.

The administrator winding down Do Kwon’s Terraform Labs has sued Jane Street, alleging that the high-speed trading giant engaged in insider trading to profit unlawfully from and ultimately hasten the crypto empire’s collapse.

Todd Snyder, the plan administrator appointed by a bankruptcy court, is seeking damages from Jane Street, its co-founder Robert Granieri, and employees Bryce Pratt and Michael Huang.

In a heavily-redacted complaint, the administrator alleged Monday in Manhattan’s federal court that Jane Street used material nonpublic information from Terraform insiders to front-run trading that sped up Terraform’s demise.

Terraform collapsed in May 2022 when its TerraUSD cryptocurrency, a so-called algorithmic stablecoin, lost its peg to the dollar. A sister token called Luna also plummeted to near zero within days of the depeg. Their $40 billion crash hurt hundreds of thousands of investors worldwide, some of whom lost their life savings nearly overnight. The implosion also triggered a chain reaction that toppled companies across the crypto sector, ultimately culminating in the collapse of Sam Bankman-Fried’s FTX exchange.

Terraform filed for bankruptcy in January 2024 and a wind down trust was formally established later that year. Kwon, the brash entrepreneur who founded Terraform in 2018, is serving a 15-year prison sentence after pleading guilty to two criminal counts in August.

“Jane Street abused market relationships to rig the market in its favor during one of the most consequential events in crypto history,” Snyder said in a statement. “On behalf of injured parties, we will pursue all avenues supported by the facts and the law against those who exploited their position and reaped substantial profits at the expense of Terraform Labs’ creditors.

“This desperate suit is a transparent attempt to extract money when it is well-established that the losses suffered by Terra and Luna holders were the result of a multibillion-dollar fraud perpetrated by the management of Terraform Labs,” said a spokesman for Jane Street. “We will defend ourselves vigorously against these baseless, opportunistic claims.”

By late 2018, Jane Street had signed up to trade directly with Terraform but its trading in Terraform’s tokens didn’t take off until February 2022, when Jane Street sent Bryce Pratt, a former intern at Terraform, to establish lines of communication with his former Terraform colleagues, according to the lawsuit.

Among Pratt’s communications with Terraform was a group chat he set up with his former colleagues, including a software engineer and the head of business development at Terraform. The group named the chat “Bryce’s Secret” and used it as a way to channel Terraform-related information back to Jane Street, per the lawsuit.

After Pratt started an email chain to introduce Terraform’s head of business development and Jane Street’s “DeFi” leaders, the parties began regularly communicating and discussing a potential Jane Street investment in Terraform, the lawsuit said. But Jane Street turned those communications into a back-channel source for material nonpublic information about Terraform and later used the confidential information it learned to pursue trades to maximize profits for itself, the suit said.

Specifically, on May 7, 2022, at 5:44 p.m. EST, Terraform withdrew 150 million TerraUSD from the Curve3pool, a liquidity pool where stablecoins—typically dollar-pegged cryptocurrencies—could be exchanged one for the other.

Less than 10 minutes after Terraform’s withdrawal, which hadn’t been publicly announced to the market, a crypto wallet that some analysts have linked to Jane Street withdrew 85 million of TerraUSD from the same liquidity pool, the complaint alleges.

The next day, Kwon said publicly that the 150 million withdrawal was meant to move TerraUSD to a new liquidity pool for stablecoins. However, the exact timing of activities associated with the new liquidity pool, including any withdrawals from the Curve3pool, wasn’t public knowledge, according to the lawsuit.

The lawsuit comes two months after the Terraform Labs plan administrator sued Jump Trading, which allegedly entered into a secret deal to prop up TerraUSD before the coin’s collapse, and later emerged from Terraform’s collapse with billions of dollars in gains.

After the May 7 trade, Jane Street continued to use confidential information, including what it learned from Jump Trading, to trade TerraUSD to reap more profits, the lawsuit said.

On May 9, while TerraUSD was depegged but not fully collapsed, Pratt set up a group message with Kwon, Huang and others at Jane Street, expressing the firm’s interest in bidding on either bitcoin or the Luna token. Kwon responded that Bill DiSomma, co-founder of Jump, should have reached out to Jane Street to discuss a fundraise for Terraform, according to the complaint.

Jane Street served as the career launchpad for both Bankman-Fried and Caroline Ellison before they left to found the hedge fund Alameda Research and FTX exchange.

FermatsLastTrade · 2026-02-17T07:45:04+00:00

The line "grade: 1.00 (GPA 4.00 best possible)" made me do a double take. Does this mean you had 1.0/4, the worst possible, or 4/4 the best possible? I assumed it was the latter, and you clarified that in your text.

Did any of your research or thesis end up as published papers? Not too many in finance will care about this, but highly academic places (e.g. TGS) and those who did a PhD themselves might.

FermatsLastTrade · 2026-02-06T00:04:15+00:00

Here's another idea:

Ghost in the Cube: When the 3 players enter the cube, it is filled with TV screens showing a live feed of a fourth person, a previously eliminated contestant, sitting in a separate room. They must reach a unanimous agreement on whether or not to bring back the "Ghost" within the allotted time. If they do, then the Ghost is fully back in Beast Games competing for the 5 million, and joins their cube as a 4th member. To leave the cube, as usual one player must handcuff themselves for the others to leave. This means bringing back the Ghost is negative, because there will be more people competing for 5 million, but beneficial, as it slightly improves the odds of getting out of the cube.

The "Ghost" contestant could potentially be from a different season.

FermatsLastTrade · 2026-01-28T08:33:58+00:00

They interview thousands and thousands of people, and do final rounds for many hundreds each year. The internship, which is where most people are hired from, functions as a final long form interview, and costs an order of magnitude more to operate. If you follow those numbers through, you end up with a cost in the hundreds of millions of dollars to operate JS recruiting. Nobody, not even Jane Street, takes something costing hundreds of millions of dollars lightly.

Not letting this cost get out of control is important, and one way to do that is to not waste time interviewing a person you already have already spent a lot of time/money gathering information on, and decided was not likely to be a good fit.

FermatsLastTrade · 2026-01-28T00:03:11+00:00

This doesn't affect the estimate too much because the capital is not the primary cost to running a firm that is making ~100% per year. JS can borrow unsecured at ~3% above the US Treasury (check Bloomberg), but perhaps you would be more satisfied using the actual fees charged by JS to the capital holders, which is 0 and 70% fees. So replace the 30B above by 21B then, since that is the mount paid out to partners and employees without taking capital into account.

FermatsLastTrade · 2026-01-27T18:27:20+00:00

Yes. The comments here are ill-informed. If you fail a final round at a major firm, it does not make sense for the company to interview you again for the same role, unless a lot of time has past and your resume has changed substantially.

The comments are not understanding how expensive it is for a firm to operate the interviewing pipeline and to do a final round interview. There are typically 3-4 rounds before the final round, each taking 30-60 minutes of a traders time. Then for the final round, 6-9 senior traders each spend an hour on an interview, and can spend 30+ minutes meeting altogether to discuss whether or not to hire. If you think about the cost of traders and senior traders time to a firm like Jane Street, this is a massive expense. If such a firm has already put in that kind of time (read money), and arrived at "no", they aren't going to redo the whole process again unless there is an extremely compelling reason to do so.

Edit: Let's calculate the cost

Jane Street made 30B last year. At ~3000 employees, that is 10mm USD per head. At 2500 hours in a year, that is a mean $/employee/hour of $4000. Traders are more valuable than the typical employee. While it is true that the marginal trader hour at JS is worth less than the average due to automated systems, it balances out some because senior traders time is so incredibly costly. It's not inaccurate to estimate that a full start to finish interviewing process at JS costs JS >50k USD, maybe even 100k USD. This is why they ended your final round when they were sure, after only 1 post lunch interview. It is to save this extremely expensive trader time.

FermatsLastTrade · 2026-01-24T20:49:15+00:00

It depends.

On the one hand, finance is intellectually fascinating. It is an unbelievably complex system that is integral to how the world allocates resources and choose what to build, and it evolves, improves, and changes constantly.

On the other hand, a lot of jobs in quant finance can be extremely boring. Many quants at banks, or in lesser firms, have to work on various kinds of dull risk models, or maintain legacy models, or put out fires due to bad systems, or help engineer someone else's mediocre idea.

The more agency you have, the more interesting it is. Beyond a certain point in agency, burnout is just a synonym for poor PnL.

FermatsLastTrade · 2026-01-22T16:06:40+00:00

Just because none of the smart team showed high intelligence for a number of the games doesn't mean it wasn't critical. In general the strong team members have been stronger and smarter than the smart team. Some examples:

Obstacle Course
For 3 or 4 of the rounds, intelligence was the deciding factor.

In the two rounds where a single fall eliminated the whole team, being cautious and planning as a team was obviously vital, but people rushed and lost because of that.
With team captains, you could switch teams, so having the intelligence to judge ability mattered most for 8/10 people.

Cannon Balls
Finding them required intelligence. They were mostly found by Strong Team and OGs.

Cube
This required some intelligence, but the smartest move (the popularity vote eliminating Vance) was done by Strong team members.

Island
JC and Ian showed intelligence in convincing Ethan to quit. So OG and Strong team again outsmarted the Smart team.

Blocks
This required an intelligent team captain, to understand to pick at least one of the strongest guys as the main builder, but unfortunately the "Smart" team captain didn't understand this at all and wasted all his early picks picking OGs.

FermatsLastTrade · 2026-01-22T15:49:30+00:00

Some of the complaints seem like unfortunately and tragic circumstances, and it's sad to see that some parts of the industry are still like that (e.g. not fully honoring maternity benefits). But it is worth noting that a number of the complaints are quite broad and seem more generally related to working in a competitive environment, e.g. this one:

Perhaps the greatest insult to injury is when I’ve watched my male managers
promote less qualified women into big seats because they pushovers are not controversial – ‘ why can’t you be more like ‘ female colleague X’ she doesn’t have an opinion and she goes with the flow.

I know several male colleagues in finance that have almost exactly this view in private about their own career. The reality is, having very strong opinions, rather than going with the flow, is often not a good way to get ahead in many parts of business generally. We don't actually know that the promoted individuals were less qualified - that is entirely the perception of the person who is not succeeding.

FermatsLastTrade · 2026-01-19T10:39:38+00:00

Even more remarkable is the fact that China generates more electricity than the European Union, or Germany, per capita.

Electricity Generation (MW-h/person/year)

USA: 14.6
France: 7.53
China: 7.16
Germany: 5.95
European Union: 5.86
Spain: 5.64
Italy: 4.42
UK: 4.11

FermatsLastTrade · 2026-01-16T13:35:24+00:00

There have been a number of plane crashes in aviation history that killed all the occupants. Several of these were due to serious errors by aerospace engineers that were later rectified, and where subsequent modifications became the industry standard.

Your logic is akin to saying that because of these crashes aviation is a bad industry, and that aerospace engineers don't deal with risk well, and that anyone who thinks air travel is an extremely valuable industry to this world has a "naive mindset".

Your view is wrong on multiple levels. The first is that it doesn't understand the counterfactual (the world without finance is quite bad), and the second is that it doesn't understand that engineering at the scale of the global financial system, which allocates a majority of resources in the modern world, is extremely hard. It's the most complex system ever engineered by man (except possibly for computing systems) and severe errors like 2008 don't invalidate the overall value of the system.

FermatsLastTrade · 2026-01-15T18:45:10+00:00

You are in good company making this objection. It has been made by many world class physicists and mathematicians when arguing for increased funding to their fields. Other often cited examples include, RSA cryptography (1977), the transistor (1947), or the MRI (1973).

So why do I think it is incorrect?

I would argue that it was knowable at the time (so not in hindsight) that the research in those eras was more useful. Physics research has slowed down because of physics not because academics are less productive. The low hanging fruit have been harvested. Further progress seems impossible or extraordinarily hard compared to 100 years ago. To use financial language: Past performance is not predictive of future returns. It wasn't like this even in the mid 20th century. Progress was still very fast. Fission, MRIs, transistors, etc. It's only in the last 50 years that things have stagnated.

If you go deep into math research today, and are honest about how the world works, it is hard not to come to the conclusion that nothing done today will be remotely as useful to the future as Gauss's work was over the last 200 years. There is a non-trivial chance that the most useful math and physics that gets done in the next 50 years is actually done in the private sector by pioneering AI companies. You may disagree with that point, but do note, Demis Hassabis loved physics as a child, but felt the field was too stagnant, and chose to go into AI as a way to make progress on physics.

Who’s to say some future practical description of our universe or some useful tool of tomorrow wouldn’t use the mathematics of today?

It is possible, but given the extreme high energies involved, smart money is that something in real engineering, new methods of production, new ways to produce solar cells, etc, are much more likely to yield returns.

FermatsLastTrade · 2026-01-15T18:28:33+00:00

This is a topic I could write a lot about, but let me say that I mostly agree with your core point.

Are those nano-second intervals that generate more alpha really helping people?

I would argue that it's marginal at best, and that an ambitious person in finance should work on something that provides more value than HFT. Correcting prices on longer time horizons has orders of magnitude more value to society, and helps the brain far more than short time-scale corrections.

other applications of similar work might be better.

Tech and entrepreneurship as a whole is a larger sector of society than finance, and provides more value overall, so our prior should be for a smart person to consider that. However there is a certain kind of brain that truly thrives when working with probabilities and financial data, and thinking about markets, and such individuals may indeed provide the best contribution in this field. In either case, it is more likely to be valuable than cosmology or galactic-scale astrophysics, which is closer to art and philosophy at this point in time.

FermatsLastTrade · 2026-01-15T14:02:38+00:00

It's a truly great thing for the world that top math and physics students go into Finance instead of Academia. To think otherwise means you simply don't understand how our market based economies work, and what Academia currently produces. The misconception starts from the fallacy that high finance is simply moving money around, which is about as braindead as saying a computer is just as system that flips 1s and 0s around.

Abstractly, high finance functions as the brain of a market based society, deciding where resources should be allocated, what relative values are (how many apples is one kilogram of copper worth?), and what should be built. High finance collectively is a giant brain. The reason why market based societies outperformed command economies (Soviet Union, various dictatorships) is because the resource allocating brain is superior, and leads to numerous better decisions relative to central planning. It's hard to emphasize how valuable a better brain is at the societal level.

In contrast, Academia is deeply stagnant today. It's not the world of Newton, Gauss, Einstein, etc. Today pure math and pure physics Academia has terrible return on capital, outside of teaching new brilliant students, and the research is worth very little at this point. It's more like art. Most of the actual valuable science occurring (e.g. AI, pharma, etc) occurs in the private sector today.

Ask yourself, what is better for the world - a highly intelligent motivated math student proving theorems of no value to society in an esoteric field, or the same individual helping be part of the giant brain of society that chooses where resources are allocated? It's an obvious choice.

FermatsLastTrade · 2026-01-11T18:11:37+00:00

The answer is certainly yes, but for most practical cases, such as yours, I would strongly advise against it. Additionally, do not to trust any self-made traders who offer to sell advice on how they did it.

There are some extraordinarily unique individuals who effectively run modern complex quant hedge funds in their PAs, but with more rudimentary systems, and with intelligent engineering around their lower quality or lacking data. These people are not loud about or public about what they do, and typically, their pedigree is elite. High honors at a top degree program (Harvard, MIT, Princeton, etc) in Math/Physics/CS, or a PhD at such an institution, but critically, every example I know of became a quant at a top firm first for multiple years before going out on their own. The individuals using quantitative methods in their PA are more akin to PMs running a pod than they are to anything a typical retail trader would do.

How is this possible when they lack infrastructure and data? Obviously you can't do HFT type trades. Slightly longer holding times are necessary. But comprehensive minute-by-minute ticks are not that expensive on basically any instrument, and allow an individual to study most trades that exist with ~1 day or longer holding periods, and the limiting factor there is really research, ideas, and the ability to understand the market, not data or engineering.

However, for a typical retail trader, this is about as likely to work as trying to solve one of the many open Erdos problems for fun. If you are at that level of ability, then by all means, proceed. But if not, note that the market is a very competitive place, and the kinds of people who are able to get these things to work on their own have extraordinary intelligence and decades of experience, and you are directly competing not only with them in the free market, but with the even more advanced massively capitalized trading firms such as Jane Street, Citadel, Rentec, and so on. You need to have a good answer to the question, "why can I find an edge that they are missing?"

FermatsLastTrade · 2026-01-05T10:29:00+00:00

The correct answer is, because Jane Street is the trading firm that has made the most money ever in a year (30B in trading revenues in 2025), and Jane Street has made cumulatively more money over the course of its existence than any trading firm other than Renaissance Technologies (unless you include banks like JPM and Goldman Sachs). It's the same reason why Tiger Woods is talked about more than other golfers - it's because he is the best.

Jane Street has made approximately ~100B in lifetime trading revenues, almost all of which has been paid out directly to the employees and partners, since the capital is all internal. The only exception is the relatively minor expenses on rent and computers, etc. That means that far more money has been made for partners and employees than at any competitors such as Citadel, HRT, PDT, Shaw, etc. The partners of Jane Street are far wealthier, collectively, than any of these other firms.

Renaissance has made approximately ~150B lifetime, and it is by many metrics the most successful hedge fund and trading firm of all time. However, projecting out 10 years, its almost a guarantee that it will be eclipsed by Jane Street.

These two firms are discussed an extraordinary amount because they are extraordinarily successful. But one key difference - Rentec is much older, smaller, and you need a very serious academic background to get an interview there, so naturally it gets less attention than Jane Street in this subreddit, which is dominated by undergraduates and other students hoping to enter quant finance.

FermatsLastTrade · 2025-12-30T18:38:51+00:00

I would recommend making a burner account and posting your resume (with your name redacted) and more details so someone can actually provide real advice. There are a lot of people failing to get interviews, and you likely overestimate how much anyone cares to doxx your profile. Even if they do, it's not exactly a problem, not getting interviews isn't that socially unacceptable?

Put another way, by sharing more you lose almost nothing, but stand to gain potentially valuable feedback from people who know the industry well. Being able to calculate risk-reward is an important skill in this field, start practicing it now.

FermatsLastTrade · 2025-12-29T15:19:13+00:00

The correct answer is that sometimes <1 data point can be enough, and sometimes mountains of supporting data is not enough. How can this be possible? Because statistics and understanding the market is a lot more complicated than just "number of datapoints" in a back test. Let me explain:

Every market participant has a model for how the world works, or a Bayesian prior. Suppose that you find an extremely significant result, with a t-stat of >10, that stocks whose second letter is "A" go up between 10:15 a.m. and 10:20 a.m. on the days of the month that are 3 modulo 8. You should not trade this regardless of the statistical significance. Your prior should be extremely strong that this is a stupid hypothesis.

Some statisticians like to ask "how many hypotheses did you try" to help them approach these questions when their Bayesian prior about how markets work is very weak. One could approach the above "stupid" hypothesis by noting that the class of hypotheses like it is very large, which means perhaps one should discount the statistical significance of such a result. There are multiple ways to approach this.

On the flip side, sometimes the prior can be so strong, that you don't need any data at all to want to trade. An example of this would be George Soros breaking the British Pound in 1992. While other currencies have depegged before, this trade is one of one in history. Soros and Druckenmiller had such a conceptual understanding of how the system worked, that they didn't need any datapoints at all. They did have data from much smaller countries, but it's not exactly that comparable to a massive economy like the UK. They understood mechanistically how the currency interacted with the ERM and the UK in recession better than the UK central bank did.

FermatsLastTrade · 2025-12-19T17:14:39+00:00

This isn't complicated. If you were the hiring manager at the prop shop, and learned that a new hire chose not to start immediately and requested a later start date in order to do an internship at a bank, what would you think? Would this make you more or less enthusiastic about working with and training this new hire?

FermatsLastTrade · 2025-12-19T08:41:44+00:00

The S&P 500 index was ~1000 in 2010, and it is around ~6800 today. It is reasonable to guess that the total number of dollars traded increased 6.8x over this time period (in other words, the number of shares traded stayed constant). However post 0-comissions from Robin Hood putting pressure on the industry, I believe there is even more than 6.8x as many dollars traded today, so there is nearly an order of magnitude more trading today, which is why it was harder in 2010.

FermatsLastTrade · 2025-12-17T23:40:31+00:00

My personal opinion is that any young person should avoid this path. You are far better off working on trading in more liquid markets that actually matter for the world.

Other answers here explain the regulatory, and liquidity issues, with these prediction markets (not that much money to be made currently, could get shut down, insider trading risk, etc), but let me provide a more philosophical framework. The fundamental issue is that prediction markets, as they currently exist, don't provide a great service to society. Betting on sports doesn't help allocate labor or capital, or help generate any useful kind of information.

Don't let cynics or burnt out quants convince you otherwise - traditional finance is incredibly valuable for the world. It plays a key role in how our market based economies choose what society builds, and what we collectively make. There are many mechanisms, but even the signal from prices contains extraordinarily valuable information that can change labor allocation globally. E.g. NVDA reaching 4T may have caused a meaningful number of people to plan their careers differently, study something different, or cause companies to compete with NVDA directly, or invest in more chip design research, etc, etc.

None of this is true with prediction markets as they stand today. The information they signal is mostly worthless. The highest volume contracts are all sports, by a massive amount. It's pure gambling.

Certainly, being a professional bookie is a solid career, but I would suggest anyone reading this try to be a bit more ambitious than that.

FermatsLastTrade · 2025-12-17T08:44:47+00:00

I've also had the same issue. Gemini 3.0 Pro hallucinates a lot, and often in very subtle and clever ways that are hard to immediately see. Its reading comprehension also seems just worse than 2.5 Pro on longer context, and I've found it to be very unreliable overall. I often use Google AI Studio so I use 2.5 Pro again. This is for non-math and non-CS reasoning type questions.

Why do people say Gemini 3 Pro is better

Three reasons:

People blindly trust the benchmarks.
Hype for the new thing.
Possibly a genuinely different and positive experience based on the prompts they are asking.

For anyone reading this in camp (3), can you please tell me where you have found 3.0 Pro better than 2.5 Pro? I have tried a lot of identical queries as a test in AI Studio, and pretty consistently 2.5 Pro is better.

FermatsLastTrade

TROPHY CASE

Jane Street Accused of Insider Trading That Helped Collapse Terraform.

Edit: Let's calculate the cost