Something recent is worth paying attention to.

In the crypto market at the end of February, Bitcoin repeatedly experienced a series of precise sell-offs around 10 a.m. Eastern Time in New York, which the community jokingly called the "Jane Street 10 a.m. dump strategy."
But everything suddenly changed this Monday—an indictment from the U.S. Federal Court in New York made this mechanically precise selling pressure disappear, and Bitcoin and altcoins surged accordingly.
This is not a joke; it actually happened.

The root cause dates back to May 7, 2022.
At that time, the Terra collapse shocked the entire crypto community, and now, the bankruptcy liquidation team has finally filed a lawsuit against Jane Street, accusing this Wall Street quant giant of using insider information for front-running trades, accelerating the collapse of the once $40 billion empire.

What exactly happened?
Terraform Labs quietly withdrew $150 million worth of UST from the Curve liquidity pool that day, without any public statement.
For an algorithmic stablecoin that relies heavily on confidence and liquidity depth, such a large-scale withdrawal was inherently dangerous.
But even more shocking was that just ten minutes later, a wallet address allegedly linked to Jane Street withdrew $85 million UST from the same pool.
Under the AMM mechanism, this was like detonating a precise bomb on an already cracked dam, directly triggering the UST liquidity crisis and subsequent death spiral.

The lawsuit documents reveal more details.
Jane Street is accused of deliberately arranging for Bryce Pratt, a former intern at Terraform Labs, to reconnect with the company's engineers and executives.
This private chat group, composed of former colleagues, effectively became a backdoor for leaking core secrets of Terraform to Wall Street.
Moreover, the bankruptcy liquidation team had previously filed a $4 billion lawsuit against another quant giant, Jump Trading, and the latest allegations further suggest that some non-public information from Terraform was leaked to Jane Street via Jump.

This raises a deeper question:
Are these quant giants crossing the boundaries between traditional finance and crypto market operations, and are their black-box strategies market drivers or amplifiers of systemic risk?

In traditional markets, Jane Street is known for extreme low-profile operation and astonishing profitability, capturing tiny spreads through mathematical models, high-frequency trading, and millisecond-latency hardware.
But in the crypto space, with its regulatory vacuum, the profit-seeking nature of capital is more easily distorted into predatory trading.
Crypto market depth is far less than that of U.S. stocks, and when funds of Jane Street’s size engage with algorithmic trading engines, they are no longer price takers but price makers.

Take the recently hotly discussed "10 a.m. dump" as an example.
Due to the operation mechanism of spot Bitcoin ETFs (like BlackRock’s IBIT), market makers need to align with net asset value at specific times.
Some analysts point out that these giants, leveraging their large holdings and algorithms, can artificially create panic selling during periods of relatively low liquidity, triggering retail investors’ margin liquidations, and then accumulating shares at lower prices.
In the U.S. traditional markets, such strategies would face strict SEC scrutiny, but in the crypto spot market, the boundaries remain blurred.

The Terra incident vividly demonstrates the power of "black-box algorithms + information asymmetry."
When the system is stable, market makers provide liquidity;
but when tail risks emerge, their algorithms instantly betray the market.
They not only fail to act as buffers but become the first to short or withdraw.
With massive capital, this behavior of "borrowing the umbrella in fair weather, collecting it in the rain" quickly amplifies localized liquidity crises into systemic collapses.

Looking at it from a broader perspective, Jane Street’s operations in the crypto market are not an isolated case.
In July 2025, India’s Securities and Exchange Board (SEBI) fined Jane Street 48.44 billion rupees (about $580M) and banned it from trading.
SEBI’s investigation found that Jane Street engaged in "short-term, large-scale, highly aggressive" interventions on 18 options expiry dates (including Bank Nifty and Nifty 50), using financial leverage to manipulate index levels at key settlement dates for huge profits on its options positions.
Whether in India’s traditional derivatives markets or on-chain liquidity pools like Terra, the same logic applies: identify vulnerabilities in market structure and use vast capital and millisecond execution speeds for highly aggressive interventions.

The difference is that traditional financial markets have mature regulatory bodies conducting thorough post-event reviews;
whereas in the 2022 crypto market, these giants naively believed that the veneer of decentralization could hide everything.

Now it’s 2026, nearly four years after Terra’s collapse.
Do Kwon was sentenced to 15 years in prison last year, but why are the liquidation lawsuits from market makers only now reaching a climax?
This reflects a new characteristic of the crypto industry entering deep waters: cross-cycle accountability.
In the past, the rapid cycles of crypto markets led many wrongdoers to believe that surviving a bear market would allow the next bull run to cover their sins.
But the relentless pursuit by Terraform’s liquidation team shows that combining traditional bankruptcy procedures (subpoena powers, communication record access) with blockchain transparency (on-chain tracking) is thoroughly shattering this illusion.

Jane Street’s involvement in the Terra scandal is not just a legal battle involving billions in damages; it’s a landmark event in crypto financial history.
It tears away the elegant, mysterious veil of Wall Street quant giants in the decentralized world, exposing their true face: turning computational power and financial advantage into tools of predation in a regulatory vacuum.
This core “witch hunt” in crypto is not over-regulation but a necessary pain in the market’s maturation process.
It ruthlessly reminds all institutional participants:
Although blockchain is borderless, every timestamp on the chain will become irrefutable evidence in court.
For market makers, the era of reckless, blind expansion is over.
In future market competition, compliance will no longer be an optional moat but the bottom line for survival.