The Crypto Crash That Erased $40 Billion—Someone Knew the Outcome 10 Minutes Early
Original author: Universe Wave Naruto, Shenchao TechFlow
In May 2022, $40 billion vanished within 72 hours.
That was the most devastating collapse in crypto history. UST, once hailed as the "crown jewel of algorithmic stablecoins," plummeted from $1 to worthlessness within days; Luna, which once had a market cap of nearly $40 billion, crashed from a high of $116 to nearly zero.
Millions of ordinary investors lost their savings that early summer, refreshing their screens and staring at the continuously falling K-line, unsure of what had happened or what to do.
The official explanation came quickly: the algorithm was flawed, Do Kwon lied, and the market died naturally. Most people accepted this answer, filing the disaster away as “another lesson from the crypto world,” and moved on.
This answer has remained unchanged for nearly four years.
On February 23, 2026, Terraform Labs’ bankruptcy trustee, Todd Snyder, filed a complaint with the U.S. District Court for the Southern District of New York, bringing the world’s most secretive and profitable quantitative trading giant, Jane Street, into the spotlight.
The question that was silent for four years has finally received a new version of an answer.
Jane Street and the secret chat group for LUNA
To understand the weight of these allegations, first know who the defendant is.
For most crypto users, Jane Street may be an unfamiliar name. But on Wall Street, it’s legendary—a company that deliberately stays under the radar yet has quietly become 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 small office in New York. They began with ADR arbitrage—unremarkable and unnoticed. But they soon turned their attention to ETFs, then a niche market, and made it their core focus.
This bet changed everything.
Today, Jane Street is one of the world’s largest market makers, operating simultaneously across 45 countries and more than 200 trading venues, holding approximately 24% of the primary market for U.S.-listed ETFs and achieving monthly equity trading volumes of up to $2 trillion. In 2024, its full-year net trading revenue reached $20.5 billion, surpassing Bank of America and rivaling Goldman Sachs. In the second quarter of 2025, its quarterly net trading revenue rose to $10.1 billion, with net profits of $6.9 billion, setting a new quarterly record for all major Wall Street investment banks.
3,000 employees, no CEO, no traditional hierarchy, with everyone compensated based on the company’s overall profits. Jane Street describes itself as a “collection of puzzle solvers,” while outsiders call it an “anarchist commune”—flat, mysterious, and almost entirely closed to the media.
Its alumni list includes a well-known figure: SBF joined Jane Street after graduating from MIT in 2014, where he honed his trading instincts for three years before leaving in 2017 to found Alameda Research and FTX. The people trained by this company have profoundly changed the cryptocurrency world—in every sense of the term.
Today, the company, known for its "low-key, precise, and always staying on the side of information advantage," has found itself on the defendant's bench.
At the heart of the allegations is a private chat group called "Bryce's Secret."
The founder is Bryce Pratt, an employee at Jane Street. He previously interned at Terraform, and after leaving, joined Jane Street—yet he never severed his old connections, keeping both doors open.
In February 2022, Pratt brought his former colleague into this private channel, establishing an information pipeline connecting Terraform’s internal team with Jane Street, linked to Terraform’s software engineers and head of business development. The complaint alleges that it was through this pipeline that Jane Street learned in advance of Terraform’s secret plan to withdraw funds from the Curve liquidity pool—a decision not yet disclosed to the public.
At 5:44 PM on May 7, just 10 minutes after Terraform Labs quietly withdrew $150 million in UST from the Curve 3pool, a wallet allegedly linked to Jane Street followed suit, withdrawing $85 million in UST—the largest single transaction in the pool’s history.
On May 9, UST had dropped to $0.80, and signs of collapse were undeniable. At this point, Pratt sent a message through the group chat to Do Kwon and the Terraform team, suggesting that Jane Street might consider purchasing Luna at a significant discount.
While harvesting retail investors, they’re also preparing to pick up bargains amid the chaos.
The defendants named in this action, besides Pratt, include Robert Granieri, co-founder of Jane Street and the only one of the four founders still employed, as well as employee Michael Huang. The complaint cites the Commodity Exchange Act and the Securities Exchange Act, and alleges fraud and unjust enrichment, requesting a jury trial and seeking damages and disgorgement of profits.
Bloomberg, citing key statements from the complaint, stated that Jane Street's actions allowed it to "close out hundreds of millions of dollars in potential risk exposure just hours before the collapse of the Terraform ecosystem."
Jump Trading and the Deeper Darkness
The lawsuit against Jane Street is not an isolated incident. Two months ago, the same clearinghouse, Todd Snyder, filed a lawsuit in federal court in Illinois against Jump Trading and its co-founders William DiSomma and former Jump Crypto president Kanav Kariya, seeking $4 billion in damages.
The story of Jump is, in some ways, even more striking than that of Jane Street.
The complaint reveals a previously unarticulated picture: as early as May 2021, when UST first experienced a depegging crisis, Jump secretly purchased approximately $20 million worth of UST to stabilize its price back to $1.
Later, the public believed the fabricated story of the algorithmic stablecoin, believing the algorithm worked and the system was self-healing. Terraform used this to evade regulatory scrutiny, while Jump, in exchange, acquired over 61 million Luna tokens at $0.40 each, when the market price was approximately $90—a discount of over 99%. Jump later sold these tokens, reportedly earning approximately $1.28 billion, according to the complaint.
During the final collapse in May 2022, the Luna Foundation Guard transferred nearly 50,000 bitcoins (approximately $1.5 billion) to Jump without a written agreement, ostensibly to support the peg. The ultimate destination of the bitcoins remains unconfirmed; the complaint states: “It is unclear whether Jump further enriched itself as a result.”
Notably, DiSomma and Kariya invoked the Fifth Amendment of the U.S. Constitution hundreds of times during prior SEC investigative questioning to refuse to answer. Jump’s subsidiary, Tai Mo Shan, settled with the SEC in 2024 for $123 million, admitting to having “misled investors.” Kariya resigned as president of Jump Crypto in the same year, citing an investigation by the CFTC.
More critically, according to the Jane Street complaint, it was through Jump’s information channels that Jane Street gained access to certain “non-public material information.” The two cases are connected by an invisible thread.
But there's another side to this story.
Jane Street's response was direct: it was a "desperate lawsuit" and a "transparent attempt to extract money from the company." They added that the losses suffered by Terra and Luna investors stemmed from a "billion-dollar fraud" created by Do Kwon and the Terraform management team, and they would strongly counter it.
This statement is not wrong. Do Kwon admitted to fraud and was sentenced to 15 years in prison; Terraform also paid a $4.47 billion fine. Luna’s death spiral was predetermined by its mechanical design: algorithmic stablecoins are inherently systems that require continuous buying pressure and sustained confidence; once panic is triggered, the arbitrage mechanism reverses and self-destructs at an exponential rate.
But "Do Kwon is guilty" and "others are innocent" are not mutually dependent.
It is a fact that a building has a fatal structural flaw. Whether someone secretly removed the most valuable items inside before firefighters arrived during its collapse is another separate legal and moral issue.
Another detail deserves attention. On the very same day the Jane Street lawsuit was exposed, on-chain researcher ZachXBT announced that on February 26, 2026, he would release “a major investigation into the most profitable institution in the crypto industry, where multiple employees have long exploited internal data for insider trading.” He did not name the entity. But the timing’s subtlety has left the entire crypto Twitter holding its breath.
The story isn't over yet. But one thing is already clear: in the crypto market, which touts "decentralization," true inequality has never disappeared—it has merely moved from bank trading desks to behind blockchain smart contracts, continuing in a more hidden form.
The Luna event may have been just the most violent tear in that crack, and those on the other side of the crack had already safely evacuated long before the wall fell.
In movies, it’s said, “The rich get their money back in full, while the common people split it three to seven”—and the same holds true in the crypto world.
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